Legal ESG Insights

Benelux Spotlight: Sjoerd Kamerbeek, Managing Partner at Van Doorne

Fri, 15 Aug 2025 13:51:03 GMT

Sjoerd Kamerbeek is a standout figure in the Dutch legal sector. Appointed Managing Partner of Van Doorne in 2023, he represents a new generation of leadership—strategic, commercially astute, and unafraid to challenge traditional legal models. He joined the firm in 2011, made partner by 30, and stepped into the top role at just 36.

Legal and Commercial Expertise

Kamerbeek’s academic background—law and economics, both earned cum laude —has been central to his practice. He later completed an Executive MBA at Rotterdam School of Management, which has sharpened his ability to advise clients where law and business intersect.

He focuses on corporate litigation, with particular strength in shareholder disputes, governance matters, and investigations. He frequently appears before the Enterprise Chamber of the Amsterdam Court of Appeal and has acted for major financial investors, supervisory boards, and companies in transition or crisis.

Market Recognition

He is ranked in both Chambers Europe and The Legal 500, where clients and peers consistently highlight his sharp legal insight, strategic clarity, and ability to navigate complexity under pressure. Kamerbeek is known for translating legal nuance into practical, commercially viable outcomes.

Leadership and Strategic Direction

As Managing Partner, Kamerbeek is guiding Van Doorne through a period of strategic growth and market adaptation. The firm has recently made several high-profile partner appointments, particularly in ESG, regulatory, and dispute resolution. He is also engaged with broader leadership dialogue in the legal profession—lecturing on social entrepreneurship at Utrecht University and serving on its advisory board.

In recognition of his leadership in ESG-related legal practice, Kamerbeek will serve as a keynote speaker at our upcoming Legal ESG: Benelux event. His perspective will contribute to a wider discussion on the intersection of law, sustainability, and responsible corporate governance in the region.

Looking Ahead

Kamerbeek represents the evolution of law firm leadership—combining technical excellence, commercial acumen, and a future-oriented view of legal services. As client expectations evolve toward more integrated and ESG-conscious legal counsel, his approach sets a compelling benchmark for firms across the Benelux and beyond.

What to Expect at Legal ESG: Benelux – 24 September 2025, The Hague

Thu, 14 Aug 2025 10:33:21 GMT

Legal ESG: Benelux is the region’s flagship event dedicated to the evolving intersection of law, sustainability, and corporate responsibility. Taking place on 24 September 2025 in The Hague, the forum brings together ESG practitioners, senior legal leaders, academics, and policy voices to explore how environmental, social and governance factors are transforming the legal landscape in Belgium, the Netherlands and Luxembourg.

Hosted by law firm La Gro and curated by Inside Practice , the event is a part of the Legal ESG global series and aims to offer both a local lens and an international outlook on the rapidly shifting ESG agenda.

Setting the Agenda: From Global Uncertainty to Local Application

One of the major themes of this year’s conference is how macro trends—from the second Trump presidency to the energy transition and geopolitical fragmentation—are shaping ESG-related risks and responses. Keynote speaker Gerard Reid , an international advisor on energy and policy, will open the conference with a strategic briefing on the global ESG and regulatory environment and its relevance for legal practice in the Benelux region.

Attendees can expect a timely and sober assessment of what legal risk will look like in 2026 and beyond as the event will address these topics with clarity and urgency.

ESG in Practice: Regulation, Risk and Litigation

Sessions throughout the day will focus on how ESG is becoming increasingly embedded in legal workflows, client expectations, and operational strategy. One panel will explore landmark ESG cases , examining how legal teams are responding to litigation risks around climate, supply chains, and human rights. These cases are now shaping precedent and influencing corporate strategy across jurisdictions.

Another session will focus on contractual ESG risk , led by top regulatory lawyers from the region. From supplier codes of conduct to the implications of sustainability-linked KPIs in M&A and financing, lawyers will explore how to align contracts with evolving ESG obligations—while mitigating liability.

Nature, Biodiversity, and the New ESG Frontier

Biodiversity loss and nature risk are emerging as the next big challenge in the ESG space. With upcoming global frameworks expected to link environmental disclosure to natural capital, lawyers are increasingly required to understand nature-related legal obligations. A dedicated session will offer insight into how biodiversity is intersecting with legal mandates, regulatory pressure, and client advisory roles.

Some of Our Speaking Faculty

The speaker lineup includes regional experts, thought leaders and practising lawyers from top firms and organisations, such as:

Anna Duron (Ashurst) – ESG regulatory updates in the EU
Aukje Haan (CMS) – ESG risk in contracts
Boris Bekkering (Regreener) – Climate litigation and impact claims
Christiaan Alberdingk Thijm (bureau Brandeis) – Technology, privacy and ethics
Sjoerd Kamerbeek (Van Doorne) – Keynote on ESG litigation in Benelux
Gerard Reid – Global keynote on energy, geopolitics and ESG transformation
Daan van Maurik (Utrecht University) – Academic insights on climate jurisprudence

This mix of academic and commercial voices ensures that conversations stay rooted in both the practical and theoretical dimensions of ESG law.

Why Attend?

Legal ESG: Benelux is not just another conference—it’s a strategy session, knowledge exchange and leadership dialogue in one. You’ll gain:

A comprehensive understanding of ESG trends shaping legal services in Benelux
Strategic insight into the regulatory, reputational and legal risks emerging across ESG domains
Practical tools to guide clients and firms through change
A peer network of legal professionals at the forefront of ESG innovation

Whether you're advising boards, drafting policies, or rethinking the internal values of your firm, this event delivers value you can act on immediately.

Event Details

Date: 24 September 2025
Location: La Gro, The Hague
Time: Full day, ending with a networking reception
Audience: Law firm partners, in-house counsel, ESG advisors, academics, regulators

Limited registration is available.

Final Thoughts

As ESG continues to evolve from a reporting burden to a legal imperative, Legal ESG: Benelux offers a rare opportunity to step back, learn from peers, and engage meaningfully with the future of law. If you’re advising clients, shaping compliance, or building a values-based legal culture, this event belongs on your calendar.

Register here : Legal ESG: Benelux

Beyond Compliance: The €90 Billion Lesson in ESG, Trust, and Inclusion

Tue, 12 Aug 2025 10:32:31 GMT

At Legal ESG: London, the message from Gihan Hyde was both clear and provocative: the true measure of ESG success isn’t mere compliance, it’s trust. Hyde posed two critical questions to a room filled with seasoned ESG professionals:

How many have worked or currently work on ESG projects?
How many genuinely believe their ESG initiatives have built trust?

The discrepancy in hands raised between these two questions wasn’t just stark, it symbolized a profound gap worth €90 billion, illustrated vividly by the Wirecard scandal. Wirecard’s downfall wasn’t rooted in outright legal non-compliance but in a catastrophic failure of trust. Despite robust legal frameworks and comprehensive sustainability agendas, Wirecard’s core issue was the absence of meaningful stakeholder engagement, transparent communication, and genuine inclusivity.

The Three Pillars of Trust

Hyde emphasized that authentic ESG engagement must rest on three essential pillars:

Clear Communication: ESG communications must be transparent and accessible enough to be understood universally, free of jargon or ambiguity.
Legal Legitimacy: True ESG commitment transcends compliance, embedding responsible actions into the fabric of the business itself.
Stakeholder Engagement: Inclusivity isn’t optional; it’s foundational. Every relevant voice must be heard and genuinely integrated from the outset.

The Blind Spots Holding ESG Back

Hyde highlighted three significant blind spots undermining ESG progress:

1. Scope 3 Emissions

Often disregarded because they're indirect and challenging to quantify, Scope 3 emissions represent a critical vulnerability. They account for the vast majority of a company's carbon footprint but remain neglected because companies don't directly control them. This oversight is unsustainable, particularly as new regulations, such as the CSRD and CSDD in Europe and evolving standards in the Middle East, begin mandating comprehensive reporting.

2. Diversity and Inclusion Data (EDI)

Too frequently, ESG initiatives overlook who exactly is involved in shaping sustainability strategies. Questions such as who participated in materiality assessments, and how diverse those voices were, remain rarely asked. However, this is rapidly changing. For instance, the SEC now demands diversity disclosures from listed companies, scrutinizing not just internal practices but those of their supply chains. Similarly, the UK's FCA increasingly expects strategic reporting on diversity and inclusion rather than merely numerical data.

3. Stakeholder Narratives

Traditionally, materiality assessments were investor-centric, but this narrow approach is no longer sufficient. Modern regulations require a broader narrative that genuinely integrates stakeholders, including employees and community voices. This holistic approach not only fulfills regulatory demands but builds authentic trust and resilience.

Case Study: The High Cost of Neglecting Engagement

Hyde shared a cautionary tale of a global company with a robust ESG report, but upon closer scrutiny, substantial gaps emerged:

Supply Chain Transparency: Although the company touted regular assessments, 60% of suppliers were neither assessed nor engaged on ESG alignment.
Female Leadership: Public pride masked an alarming 70% increase in female leadership turnover.
Community Impact: Their praised community engagement inadvertently exacerbated water shortages, highlighting compliance without true accountability.

The outcome? A year later, the company's overlooked gaps culminated in a whistleblower scandal and $50 million in fines. The lesson? Without genuine stakeholder engagement, ESG efforts are fragile.

Redefining the Role of Compliance and Legal Professionals

Hyde underscored the invaluable role that compliance and legal teams play. Traditionally seen as gatekeepers of legality, their true strength lies in their ability to question, clarify, and simplify complex ESG processes. Hyde challenged these professionals to shift their perspective:

Instead of merely asking if something is legal, ask if it’s impactful and meaningful.
Question not only the source of data but also how inclusively the data was gathered.
Foster continuous dialogues with broader employee groups rather than settling for limited communication channels.

She illustrated this shift through her work at Barclays following the Libor scandal. Rather than surface-level compliance messaging, she embedded risk awareness and responsibility into every phase of the employee lifecycle, fundamentally changing the bank’s compliance culture.

The New ESG Mindset

Hyde closed with a transformative idea: the opposite of legality isn’t illegality—it’s disengagement. True compliance and trust arise from deep, inclusive, and proactive stakeholder engagement. Companies must embrace this principle, or risk catastrophic failures of trust.

In an era where ESG defines not just compliance but corporate survival, the question is clear: Are you merely compliant, or are you authentically engaged?

Upcoming ESG Events

Legal ESG: Europe : An opportunity for law firm leaders, in-house counsel, compliance professionals, and ESG experts to come together, learn from each other, confront the challenges on the horizon, and commit to a future where ESG is a fundamental element of corporate strategy and legal practice.

Legal ESG: Benelux : We will discuss key themes including regulatory change, political context, litigation, and the evolving role of legal professionals in the ESG space.

What to Expect at Legal ESG: Benelux – 24 September 2025, The Hague

Wed, 06 Aug 2025 13:32:51 GMT

Legal ESG: Benelux is the region’s flagship event dedicated to the evolving intersection of law, sustainability, and corporate responsibility. Taking place on 24 September 2025 in The Hague, the forum brings together ESG practitioners, senior legal leaders, academics, and policy voices to explore how environmental, social and governance factors are transforming the legal landscape in Belgium, the Netherlands and Luxembourg.

Hosted by law fir m La Gro and curated by Inside Practice , the event is a part of the Legal ESG global series and aims to offer both a local lens and an international outlook on the rapidly shifting ESG agenda.

Setting the Agenda: From Global Uncertainty to Local Application

Attendees can expect a timely and sober assessment of what legal risk will look like in 2026 and beyond as the event will address these topics with clarity and urgency.

ESG in Practice: Regulation, Risk and Litigation

Nature, Biodiversity, and the New ESG Frontier

Featured Speakers to Watch

The speaker lineup includes regional experts, thought leaders and practising lawyers from top firms and organisations, such as:

Anna Duron (Ashurst) – ESG regulatory updates in the EU
Aukje Haan (CMS) – ESG risk in contracts
Boris Bekkering (Regreener) – Climate litigation and impact claims
Christiaan Alberdingk Thijm (bureau Brandeis) – Technology, privacy and ethics
Sjoerd Kamerbeek (Van Doorne) – Keynote on ESG litigation in Benelux
Gerard Reid – Global keynote on energy, geopolitics and ESG transformation
Daan van Maurik (Utrecht University) – Academic insights on climate jurisprudence

This mix of academic and commercial voices ensures that conversations stay rooted in both the practical and theoretical dimensions of ESG law.

Trump 2.0 and Its Global Implications

Wed, 06 Aug 2025 12:46:41 GMT

In a wide-ranging and sobering keynote at Legal ESG: London , Bennett Freeman—Associate Fellow at Chatham House and former U.S. Deputy Assistant Secretary of State for Democracy, Human Rights and Labor—offered a stark diagnosis of the crises converging at the intersection of law, business, and global governance. 

Titled “Trump 2.0 and Its Global Implications,” Freeman’s address painted a picture of escalating threats to democracy, accountability, and sustainability—from Washington to Brussels, from ESG portfolios to the pillars of international law. 

“I’ve never practiced law, but I’ve lived in its shadow.” 

- Bennett Freeman

Freeman opened with candor and wit, acknowledging that “I don’t have a law degree but I’ve been accused of practicing law without a license my whole career.” Still, with two history degrees and a deep engagement with corporate responsibility, governance, and human rights, Freeman has long operated in legal-adjacent spheres—particularly during his tenure as senior executive at Calvert Investments and diplomat at the U.S. State Department. 

It’s from this hybrid vantage point—part policy insider, part ESG pioneer—that he delivered a three-part message: 

The rule of law in the United States is under existential threat. 
The international legal order is being steadily eroded. 
The ESG agenda, while flawed, is too essential to abandon.

The Rule of Law: Under Siege in the United States 

Freeman's gravest concern was the current state of U.S. democracy, which he argued is deteriorating at an alarming rate. He cited Judge Michael Luttig, a conservative Republican and former federal appellate judge, who recently warned in The Atlantic that the return of Donald Trump to office constitutes “an existential threat to the rule of law in America.” 

Freeman didn’t mince words in detailing what that threat looks like in practice: 

A politicized judiciary granting expanded presidential immunity 
Mass firings of nonpartisan civil servants 
ICE deportations on questionable legal grounds 
Crackdowns on speech and academic freedom 
Government intimidation of major law firms and universities

Yet, amidst the erosion, he noted acts of principled resistance: 

Law firms standing firm under political pressure 
The American Bar Association and Brennan Center filing suit 
Microsoft quietly severing ties with firms that capitulated 
Young associates resigning from compromised firms on ethical grounds

Freeman called on the legal community to see these as signs—not just of crisis—but of responsibility: “The legal profession must be a firewall against authoritarianism.” 

The Global Rule of Law: Foundations Shaking 

Zooming out, Freeman addressed what he described as the slow collapse of the post-WWII international legal order.  

Referencing a recent Guardian article titled “Are We Witnessing the Death of International Law?” , he described a landscape marked by: 

Autocrats acting with impunity 
Attacks on independent judiciaries 
Emergency laws used to suppress minority rights 
Human rights defenders imprisoned or exiled

He brought a human face to this crisis by recalling a visit to Gaza in 1999, where he spent a day with renowned Palestinian human rights advocate lawyer Raji Sourani. Today, Sourani’s house has been destroyed—but his words resonate louder than ever: “The rule of law is not just a concept. It’s the blood and pain of real people.”  

Upcoming ESG Event: Legal ESG: Benelux

Freeman is currently working with a small group of lawyers and academics to encourage formation of a new international rule of law coalition. He urged the International Bar Association and International Chamber of Commerce: coordinate and bring the business and legal worlds into active defense of international standards and norms. 

The ESG Backlash: Political, Predictable—and Still Salvageable  

The third pillar of Freeman’s talk addressed the political backlash against ESG, especially in the U.S., where it has been co-opted as a wedge issue by conservatives and cast as “woke capitalism.” 

Drawing on his role as SVP for Sustainability Research and Policy at Calvert Investments from 2006–2015, he noted that ESG’s rapid rise almost guaranteed a counter-reaction. “We’re still fighting the aftermath of the American Civil War of the 1860s and the civil rights movement of the 1960s,” he quipped, “so of course we’re fighting the culture war around ESG.” 

But Freeman was refreshingly honest about the ESG sector’s own missteps: 

Poor and inconsistent metrics 
Funds with misleading labels 
Weak screening that allowed unethical companies into ESG portfolios

Still, he firmly rejected attempts to strip ESG of its normative heart. He criticized voices suggesting ESG be reframed only as risk management, asking pointedly, “So human rights isn’t about values? The climate crisis isn’t about values? You’ve got to be kidding.” 

Instead, he advocated a “militant pragmatism” —supporting both value-based and risk-based ESG approaches depending on the audience. “If asset managers want to talk about risk instead of ethics, fine. Just don’t throw out the E, the S, and the G.” 

ESG in a Converging World: Toward Integration, Not Abandonment 

Freeman concluded by urging ESG professionals and legal leaders to think holistically. Citing a lecture he gave at Johns Hopkins SAIS Bologna in 2023, he described a new convergence of pressures: geopolitical upheaval, ethical concerns, material business risks, and emerging technologies like AI. 

He praised recent investor frameworks (like Bernstein’s “ESD”—Emerging, Strategic, and Disruptive factors) that attempt to account for this complexity without abandoning ESG’s core purpose. 

The goal, Freeman argued, is not to discard or downgrade ESG but to integrate its elements more strategically and pragmatically. “These issues will not go away. The expectations on companies, the obligations on investors, and the pressure from civil society will not vanish.” 

Upcoming ESG Event: Legal ESG: Europe

A Call to the Legal Community 

Freeman’s closing remarks were clear and direct: 

On the U.S. side of the Atlantic, he said, ESG jobs may not be secure in the short term. But in Europe, there is still time—and momentum—to lead.  “All is not lost,” he concluded. “But if lawyers, investors, and civil society don’t rise to meet this moment, much could be.” 

As the Legal ESG: London event continued into workshops and panels, Freeman’s keynote set a powerful tone: one that framed the challenge ahead not simply as a legal or political crisis, but as a test of principle—for institutions, for industries, and for individuals. 

The Legal Profession is at a Crossroads

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Meet the Voices Shaping Legal ESG in the Benelux

Wed, 23 Jul 2025 12:11:01 GMT

ESG – environmental, social and governance – is no longer a side note; it’s the brief.

At the upcoming Legal ESG Benelux conference (24 September 2025, in The Hague - The Netherlands), leading lawyers, academics, investors and climate innovators will explore how ESG, sustainability and law intersect in practice. From climate litigation to corporate deal-making, from shifting regulations to impact investing, our speakers share one goal: managing ESG risks while seizing emerging opportunities.

Below, get to know the experts who will headline this ESG event—and why their perspectives matter for law firms, in‑house teams and every organisation navigating the fast-evolving world of legal ESG.

The 2025 Legal ESG: Benelux Speaker Line‑Up

Anna Duron , Senior Associate, EU Law – Ashurst (Brussels). Bringing deep EU regulatory insight, Anna helps clients translate complex legislation into actionable ESG strategies. Expect sharp takes on how Brussels is rewriting the rulebook on sustainability disclosures and due diligence.

Aukje Haan, Partner & Co‑Head, CMS Commercial Group : Aukje advises multinationals on ESG risks embedded in commercial contracts and supply chains. She’ll outline how law firms can build cross‑disciplinary teams to deliver holistic environmental, social and governance advice.

Boris Bekkering Commercial Director, Regreener – “No‑nonsense Climate Action”. Boris turns climate ambition into measurable impact. He’ll challenge the audience to scrutinise carbon claims and to craft legal frameworks that reward real reductions, not greenwash.

Christiaan Alberdingk Thijm Partner, Free Speech, Privacy & Reputation Management – bureau Brandeis. ESG isn’t only about carbon—think digital rights, transparency and ethical communication. Christiaan will connect privacy, free expression and governance duties in a data-driven world.

Daan van Maurik PhD Candidate, Climate Litigation – Utrecht University. Fresh research, fresh precedents: Daan will map the rapid rise of climate cases and what they mean for corporate strategy—and the lawyers advising on it.

Gerard Reid, Energy, Finance & Geopolitics; Investor & Strategic Advisor. Gerard tracks disruption in energy markets. He’ll offer a macro view: how geopolitics and capital flows are reshaping the “E” in ESG—and the legal structures that need to keep up.

Helmer Schukken, Managing Partner – Rubio Impact Ventures. Impact capital meets fiduciary duty. Helmer will discuss how investors measure value beyond IRR, and what legal terms genuinely protect mission and governance.

Irina Michkina, Senior Legal Counsel Sustainability – Booking.com. In‑house at scale: Irina navigates global ESG requirements across jurisdictions. Learn how to operationalise sustainability clauses, audits and reporting from inside a tech giant.

Jeroen Raskin, Partner, Corporate M&A – Monard Law. Deals now come with ESG DD checklists. Jeroen will share how M&A lawyers surface sustainability liabilities—and turn ESG strengths into valuation levers.

Loes van Dijk, Founder – Climate Court; EU Climate Pact Ambassador. Loes is pioneering innovative legal avenues for climate accountability. Expect a passionate call for systems change, strategic litigation and collaborative advocacy.

Mathijs Arts, Partner, Corporate M&A & Head of ESG Project Team – La Gro. Mathijs leads ESG integration across corporate practice groups. He’ll reveal practical steps for embedding sustainability in governance documents and shareholder agreements.

Pauline Kuipers, Partner, International Competition & EU Law Group – Bird & Bird. Competition law meets collaboration. Pauline will explore how companies can cooperate on sustainability initiatives without breaching antitrust rules—a hot topic for every GC.

Sjoerd Kamerbeek, Managing Partner, Corporate Litigation – Van Doorne; Director, Chair for Social Entrepreneurship, Utrecht University. From the boardroom to the courtroom, Sjoerd advises on governance disputes and purpose-driven business structures. He’ll highlight how litigation risk and opportunity evolve with ESG maturity.

Pamela Cone, ESG Lead – Inside Practice. Pamela equips law firms to walk the ESG talk—aligning pro bono, DEI, environmental targets and governance with client expectations. She’ll share frameworks for authentic ESG integration.

Robert van Beemen, Partner – DRB Groep. Robert focuses on organisational transformation. His session will zero in on change management: how to make ESG commitments stick across legal departments and business units.

Renske Mackor, Director, Legal Sustainability & Research into Rights of Nature – PwC. Renske pushes the frontier of sustainability and law , examining how rights of nature could reshape corporate responsibilities and risk assessments.

Annellies van Tongeren, Senior Manager, Legal Business Solutions – PwC. Annellies turns ESG policies into processes. She’ll demonstrate how technology and legal ops can embed legal ESG into the day‑to‑day fabric of organisations.

Why This Legal ESG Event Matters

Regulation is accelerating : CSRD, CSDDD and green claims directives demand rigorous legal responses.
Stakeholders are watching : Investors, employees and consumers expect transparent, authentic ESG commitments.
Opportunity is real : Smart governance, inclusive social policies and credible environmental action can differentiate your practice and your business.

At Legal ESG Benelux , you’ll gain the insights to move from policy to performance—while connecting with peers who are wrestling with the same challenges.

Secure your place at the leading legal ESG forum in the region. Bring your questions, your case studies and your curiosity.

Ready to register? Visit the event page and make sure your team is represented at the table where environmental, social and governance meets the future of law.

Legal ESG: Podcast Ming Zee Tee | Environment & Climate Lawyer | A&O Shearman

Wed, 16 Jul 2025 12:29:16 GMT

In this episode of Inside Legal ESG , Ming Zee Tee, Environment and Climate Lawyer at A&O Shearman and co-Founder of Legal Voices for the Future , shares her career path that led her to focus on climate, and to start the LVF organization for passionate young lawyers to also do work in this area.

Her work in co-founding Legal Voices for the Future had led her to be a finalist and winner for the Legal ESG Professor Paul Watchman Young Lawyer of the Year Award – announced at the upcoming Legal ESG London event on 8-9 July.

Upcoming ESG Events

Legal ESG Awards: Recipients Have Been Announced

Fri, 11 Jul 2025 11:30:44 GMT

We're so excited to present the winners of the Legal ESG Awards 2025.

The Legal ESG Awards 2025 recipients have been announced! These awards celebrate legal professionals leading the way in sustainable and ethical business practices. This year’s expanded categories recognize standout client service, innovative initiatives, and team efforts. The awards highlight the vital role of legal experts in shaping a responsible business landscape and inspiring continued ESG leadership.

LAW FIRM ESG PRACTICE / CLIENT SERVICE AWARD

This award celebrates a law firm that has excelled in delivering client services with a strong focus on ESG principles. It acknowledges the firm's efforts to incorporate ESG considerations into client advice, transactions, and litigation practices, setting a benchmark for ESG excellence in service clients of the legal profession.

�� Travers Smith

LAW FIRM INTERNAL OPERATIONS ESG AWARD

This award recognizes the law firm with exceptional commitment to sustainable business practices. It honours the integration of environmental, social, and governance (ESG) principles into the firm's purpose, strategy and operations, reflecting a dedication to responsible business conduct and a sustainable approach to legal practice.

�� Shoosmiths

LAW FIRM SINGLE ESG INITIATIVE AWARD

This award is presented to the law firm that exemplifies outstanding ESG leadership in the development of and implementation of a single ESG initiative. It recognizes innovative approaches to identifying, developing and implementing a single ESG initiative which is material and core to the business strategy.

�� Clyde & Co

LAW FIRM ESG EMPLOYEE ENGAGEMENT AWARD

This award recognized the greater impact achieved through engaging the firm's employees in ESG initiatives and programs.

�� Gowling WLG

LAW FIRM CLIENT ESG COLLABORATION AWARD

This award will go to those who can demonstrate meaningful and material collaboration between law firms and their client(s) toward a more sustainable, just and equitable society. Together, we can accomplish greater success.

�� Freshfields - Save the Children

LAW FIRM OUTSTANDING ESG LEADER AWARD

Sponsored by Clarasight

Given the key role which law firms play in guiding and advising their clients’ ESG strategies, it is crucial that their law firms are setting the example. It takes an ESG leader within the law firm to ensure the firm is “walking the talk” as well as advising their clients on ESG. This award recognizes as exemplary law firm ESG Leader.

�� Abhay Srivastava, Weightmans

PAUL WATCHMAN YOUNG LAWYER OF THE YEAR AWARD

Named in honour of Professor Paul Watchman, this award celebrates a young lawyer who embodies his passion for ESG law and the development of future legal leaders. In collaboration with his daughter Carla Parsons, Senior Associate at Mills & Reeve, this award recognizes a young legal professional who shows exceptional promise in driving ESG initiatives and shaping the future of responsible legal practice.

�� Ming Zee Tee , Legal Voices of the Future, A&O Shearman

LIFETIME ACHIEVEMENT AWARD

Some lawyers vow to not prosecute climate activists

Fri, 24 Mar 2023 14:55:04 GMT

This article was originally published here

Leading lawyers say they will refuse to prosecute climate protesters or represent new fossil fuel projects.

More than 120 lawyers have vowed to not act against activists from groups such as Extinction Rebellion and Just Stop Oil who are "exercising their democratic right of peaceful protest".

They have published a "Declaration of Conscience", and face the prospect of disciplinary action.

The chair of the Bar Council Nick Vineall KC said it was "disappointing".

Barrister Paul Powlesland, who signed the declaration, said: "We're refusing to advise fossil fuel companies on how to dig for new oil and gas, the same way we wouldn't advise a killer how to commit serial murders."

The group, who call themselves 'Lawyers Are Responsible', say they will withhold their services supporting new fossil fuel projects and any action against climate protesters who are "exercising their democratic right of peaceful protest".

Continued

EU Launches Green Claims Rules to Protect Consumers from Greenwashing

Wed, 22 Mar 2023 15:29:32 GMT

This article was originally published here

The European Commission on Wednesday unveiled the proposed “Directive on Green Claims,” a new set of rules requiring companies to substantiate and verify their environmental claims and labels, aimed at protecting consumers from greenwashing.

In a statement announcing the launch of the new proposed rules, the Commission said:

“Under today’s proposal, consumers will have more clarity, stronger reassurance that when something is sold as green, it actually is green, and better quality information to choose environment-friendly products and services.”

According to the Commission, the new rules address a need for reliable and verifiable information for consumers, in light of a recent study by the Commission finding that more than half of green claims by companies in the EU were vague or misleading, and 40% were completely unsubstantiated.

Continued

President Biden just used his first veto to shoot down a bill that would ban ESG considerations for retirement plans—and set up a bigger fight

Mon, 20 Mar 2023 15:37:18 GMT

This article was originally published here

President Joe Biden issued the first veto of his presidency Monday in an early sign of shifting White House relations with the new Congress since Republicans took control in January. He’s seeking to kill a Republican measure that bans the government from considering environmental impacts or potential lawsuits when making investment decisions for Americans’ retirement plans.

Continued

Time Is Running Out to Curb Climate Change, IPCC Report Says

Mon, 20 Mar 2023 15:09:10 GMT

This article was originally published here

A United Nations panel of scientists said there is a “feasible, but narrow pathway” to avoid the worst effects of climate change, however to do so, the world’s nations must together cut greenhouse-gas emissions 60% by 2035 to limit warming to 1.5 degrees Celsius over preindustrial levels.

That level of cuts would require a massive and rapid shift in the world’s energy supply that is under way in some countries, but has been stifled by the war in Ukraine, the global energy crisis and thirst for economic growth in countries like China and India. Global greenhouse-gas emissions reached record levels in 2022 and are projected to continue their upward trajectory, according to scientists.

Continued

Chapman and Cutler: Demonstrating best practices to create & execute an ESG strategy

Tue, 14 Mar 2023 15:11:42 GMT

This article was originally published here

Law firm Chapman and Cutler made it a priority to create a formalized firmwide ESG strategy that included third-party scoring and engagement with clients and other stakeholders

The growth of Environment, Social & Governance (ESG) benchmarks, scorecards, and frameworks was one of several ESG themes predicted for the legal industry in 2023. In fact, law firm Chapman and Cutler is making development of an ESG scorecard one of its top priority areas this year because the firm sees more inquiries from clients concerning the firm’s ESG policies and practices, according to William (Bill) Libit, the firm’s chief operating partner.

Continued

The first rule of ESG: Don’t talk about ESG

Mon, 13 Mar 2023 15:00:04 GMT

This article was originally published here

How much should companies cower to the political pushback against all things ESG and, well, "woke"?

I’ve been pondering that question and talking to corporate sustainability professionals and communications experts to understand how companies are traversing this political-cultural moment. Are they pulling back on their sustainability commitments, maintaining their ambition but talking about it less, or damning the torpedoes and going full speed ahead?

The short answer: Companies are staying the course but mostly keeping their heads down.

Continued

Corporate greenwashing: The lawyers are coming

Thu, 09 Mar 2023 16:13:59 GMT

This article was originally published here

Greenwashing may be one of the greatest emerging legal risks across corporate sectors worldwide. Once a topic of relatively niche concern, the spectre of greenwashing liability continues to grow as more brands seek to portray themselves as climate-friendly and lawyers (and the broader public) get wise to the fact that not all that appears green is what it seems.

As with many things in life, prevention is the best cure, and while the future of greenwashing litigation is still unwritten, some hot issues are emerging. Here, I’ll explore some of them and offer some suggestions to avoid greenwashing.

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Rejecting Climate Change and ESG Risks Breach of Fiduciary Duties

Wed, 01 Mar 2023 16:18:08 GMT

This article was originally published here

The Center for International Environmental Law’s Hana Heineken and Nikki Reisch project more financial risks as climate change worsens, saying that ignoring them could constitute a breach of pension fund managers’ fiduciary duties.

At the behest of their fossil fuel backers, Republicans are waging a multifront war to strongarm bankers and pension fund managers into downplaying the financial risks posed by climate change. These tactics are chilling urgent climate action and may actually be fueling unlawful behavior.

Last year was another blockbuster of expensive climate-driven disasters, costing at least $165 billion in the US alone. Florida’s Hurricane Ian topped the list with $113 billion in insured and uninsured losses, threatening to financially ruin the state’s homeowners and insurers.

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Water Security: A Global Challenge That Demands Our Attention and Action.

Mon, 27 Feb 2023 18:47:22 GMT

This article was originally published here

The headlines of the past few weeks alone paint a clear picture of the water challenges we face, with reports of New York investors snapping up Colorado River water rights , the ongoing water crisis in Flint , Michigan, and the worsening water crisis in California and Colorado .

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‘Game-changers’– why in-house counsel must take ownership of ESG

Tue, 21 Feb 2023 19:03:22 GMT

This article was originally published here

‘You are all climate lawyers now.’ So declared John Kerry, the US special presidential envoy for climate, at the General Assembly of the 2021 American Bar Association hybrid annual meeting in Chicago. Fast forward to 2023, and the veracity of this statement far exceeds even Kerry’s predictions.

‘You are all ESG lawyers now rings just as true’, quips Slaughter and May corporate partner and head of sustainability Jeff Twentyman. ‘All lawyers have to be conversant in it, and it should be part of all lawyers’ day-to-day job.’

Today’s focus on ESG means that the impact every company makes on the environment and society, as well as its internal governance policies, is under scrutiny. Accountability can no longer be an afterthought – it has permeated the very fabric of doing business. ‘It’s not a discrete subject anymore; it affects everything’, states Twentyman.

Inevitably, this scrutiny is also being placed on lawyers both in-house and in private practice.

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Huge scope for smaller law firms to improve ESG

Fri, 17 Feb 2023 18:43:13 GMT

This article was originally published here

There is huge scope for smaller law firms to improve their environmental, social and governance (ESG) performance, new research has found.

It also highlighted the growing importance of law firms having policies on which clients they would and would not work for.

The analysis by impactvise, which specialises in ESG data analytics, training and consulting, found that the top 25 global law firms for ESG, almost half of them based in the UK, achieved an average score of 54 out of 100 using its system that takes into account “governance, planet, people, and prosperity”.

This compared to only 9 for the whole survey group of 1,000 global firms.

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Law Firms in the ESG Game

Wed, 15 Feb 2023 18:53:45 GMT

This article was originally published here

“At the end of the day, every single lawyer has to be an ESG lawyer,” says Timothy Wilkins, global partner for client sustainability at Freshfields Bruckhaus Deringer LLP. “If we don’t train our lawyers, regardless of practice groups, to spot ESG issues,” he continues, “we’re letting down our clients.”

When Wilkins took on his current role at Freshfields in March 2020, it was one of the first of its kind at a major law firm. Things quickly changed. By June 2021 more than 40 percent of major U.S. law firms had practices centered on ESG (environmental, social, and governance), according to Thomson Reuters—a number that has since grown.

Similarly, dedicated positions like Wilkins’s have correspondingly proliferated, with almost all major firms now naming partners in charge of ESG explicitly, or sustainability more broadly. Law firms have also begun to view ESG as part of their wider missions, including through investing in thought leadership and law school opportunities to train and educate the next generation of ESG lawyers. (For more on this, see “ Charting new courses in law and business .”) In this story, we explore this emergent area, documenting why ESG has become an essential tool for every lawyer and law firm in today’s competitive atmosphere.

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Why your company may soon be hiring an ‘ESG controller’

Mon, 13 Feb 2023 19:09:00 GMT

This article was originally published here

Good morning,

Some major companies aren’t waiting until the passage of the U.S. Securities and Exchange Commission’s proposed climate-risk disclosure rule to add the right finance talent for ESG reporting.

They’re creating new roles.

Regarding ESG (environmental, social, and governance), I conducted a job search on LinkedIn under “ESG finance” and “ESG controller” to see what I would find. Citi, one of the largest banks in the U.S., is seeking an ESG disclosures controller —a new role in the company’s finance/controller function.

The person would be “responsible for oversight of ESG-related disclosures in our financial and reporting processes for Citi’s SEC filings, as well as information contained in Citi’s publicly available ESG reports,” according to the LinkedIn post. A master’s degree or a CPA is preferred. Meanwhile, Cisco Systems has several openings for an ESG finance leader to report to the ESG controller.

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ESG and Law Firms

Thu, 09 Feb 2023 19:05:55 GMT

This article was originally published here

Environmental, Social, and Governance (ESG) originated as an investing framework 1 that brought a broad range of what have traditionally been considered nonfinancial factors into financial decision-making and risk analyses. ESG expands corporate accountability beyond shareholders to include external stakeholder expectations on factors that include (among many others) climate change, use of consumer data, and racial justice— broadly grouped into the three buckets of environmental, social, and governance.

The significant increase in attention to ESG is largely the result of increased investor interest in climate risks, along with increased regulatory activity. These two factors signal a market shift away from sustainability as a marketing tool and toward recognizing environmental, social, and governance metrics as meaningful business metrics.

This article addresses some of the challenges and opportunities that ESG presents for legal service providers and their clients.

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Rescuing ESG from the Culture Wars

Thu, 09 Feb 2023 18:40:25 GMT

This article was originally published here

In the past year, ESG investing has become caught up in America’s culture wars, as prominent GOP politicians claim that it is a mechanism investors are using to to impose a “woke” ideology on companies. Upcoming congressional hearings on ESG present an opportunity to put facts on the record and to begin the process of working toward a bipartisan consensus that will take the political passion out of ESG.

The key will be returning ESG to its narrow and technocratic intention — as a means for helping companies identify and communicate to investors the material long-term risks the company faces from environmental, sustainability and governance issues. It is important to separate discussions about investors need for disclosures about material risk factors from debates about salient political issues.

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ESG Is Going to Have a Rocky 2023. Sustainability Will Be Just Fine.

Tue, 07 Feb 2023 19:11:09 GMT

This article was originally published here

If 2021 was the year ESG became mainstream in the financial world, then 2022 was the year things got bumpier. And everything around ESG points to 2023 being even more intense.

Before diving into why, let’s define terms. ESG is not sustainability. ESG — the acronym stands for environmental, social, and governance — has been mostly focused on screening companies as investments, largely by understanding how a business is affected by environmental and social issues (with an additional focus on whether a company has good governance in place to manage those risks and pressures). Sustainability is a much broader idea, focusing on a company’s role in society, how it creates value by managing its environmental and social impacts (both positive and negative), and how its actions affect a wide range of stakeholders.

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How organizations can best navigate the polarization & politicization of ESG

Mon, 06 Feb 2023 18:49:27 GMT

This article was originally published here

As the rhetoric around ESG becomes more politicized and polarizing, how can companies ensure they stay focused on delivering benefits to stakeholders?

One of the top three biggest challenges for organizations in 2023 is how to de-politicize environmental, social & governance (ESG) issues, says John Friedman, Managing Director of ESG & Sustainability at Grant Thornton, adding that the challenge is being felt across industries and sectors, and the legal industry is not immune.

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Associates driving ESG efforts across the profession

Thu, 02 Feb 2023 18:51:51 GMT

This article was originally published here

Environmental, social, and governance (ESG) has undeniably become a significant area of focus across the legal sector. It is now widely accepted that a law firm’s ESG credentials can impact key areas such as recruitment and staff retention, as well as client relationships and business development.

Thomson Reuters research shows that, within law firms, it is associates that are most determined to play an active role in shaping the ESG strategies of the firms they work for. This enthusiasm amongst junior lawyers is driving an increased focus on ESG issues within law firms.

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Disney, BofA, Apple Among ESG Proxy Targets for Conservatives

Mon, 30 Jan 2023 18:58:44 GMT

This article was originally published here

Conservative activists are accelerating a push for public companies to disclose more about their charitable giving and partnerships with outside organizations promoting social causes.

Bank of America Corp., Levi Strauss & Co., Pfizer Inc. and Walt Disney Co. already are in the crosshairs, according to Securities and Exchange Commission filings. Apple Inc., Eli Lilly and Co. and other companies also have received conservative proposals over abortion support and civil rights, records show.

And conservatives this proxy season are quietly approaching more companies to entice them to negotiate to avoid a public fight, said Scott Shepard, a fellow at the National Center for Public Policy Research, a frequent filer of proposals over environmental, social and governance concerns.

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In 2023, the only certainty for businesses will be change—and purpose

Fri, 13 Jan 2023 12:44:31 GMT

This article was originally published here

Last year, we said 2022 would bring a “great reckoning” for corporate purpose —and it did. ESG commitments made headlines and came under fire. Urgency around climate action accelerated as progress failed to cool our planet. Employees shuffled between companies in search of greater meaning, pay, and balance. Twelve months later, we’re left feeling unsettled, but sure of one thing: When a strategy like purpose causes this much tension and change throughout the global economy, it’s for a good reason.

It’s clear that business leaders, employees, investors, and communities know the pressure is on: Companies have to operate responsibly, full stop. How they do so is the challenge. So, we asked members of the Purpose Collaborative , a global network of 42 purpose-driven firms and more than 500 thought leaders and professionals, to share their insights for the year ahead. Here’s what professionals from the U.S., Europe, APAC, and Latin America believe business leaders can expect in 2023.

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ESG Case Study: How corporate purpose strengthens Kellogg’s ESG communications with stakeholders

Mon, 09 Jan 2023 12:48:56 GMT

This article was originally published here

The Kellogg Company aims to advance sustainable and equitable access to food through a new initiative that leverages its communications around its ESG activities

The attention of boards of directors are increasingly more “attuned to the importance of talent, culture, and connecting business strategy to purpose,” according to a recent Deloitte report . That means that board members continue to focus on environmental, social, and governance (ESG) issues, as well as concerns around talent retention and development, employee well-being, hybrid work environments, and the future of work.

While talent issues remain high on the board agenda for many companies, organizations need to do more to explicitly tie the well-being of their people and corporate purpose directly to corporate ESG activities on a consistent basis. Indeed, measuring social impact — the S in ESG — through the lens of people’s well-being is not yet mainstream, although it is gaining traction.

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Why 2023 will be a watershed year for climate litigation

Wed, 04 Jan 2023 12:52:01 GMT

This article was originally published here

Over the past 12 months, courts from Indonesia to Australia have made groundbreaking rulings that blocked polluting power plants and denounced the human rights violations of the climate crisis. But 2023 could be even more important, with hearings and judgments across the world poised to throw light on the worst perpetrators, give victims a voice and force recalcitrant governments and companies into action.

Although the bulk of climate lawsuits have been filed in the US, most have been thrown out of court or bogged down in procedural arguments. This year will, however, finally see a case go to trial when a group of children and young people between the ages of five and 21 square off against the state of Montana.

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Welcome to 2023: ESG & employees still win even in economic uncertainty

Tue, 03 Jan 2023 12:54:40 GMT

This article was originally published here

Can ESG issues improve the well-being of employees in the coming year as human-centered business becomes more a part of the mainstream?

Environmental, social, and governance (ESG) issues and the power shift in favor of sought-after employees will emerge as business-as-usual topics in 2023, even amid the uncertain global economic environment. Indeed, both topics remained consistently in the top business news headlines in 2022 and in general, are a continuation of a larger trend of human-centered business.

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A baker’s dozen of shareable studies that make the case for ESG

Mon, 02 Jan 2023 12:41:36 GMT

This article was originally published here

ESG will continue to be a hot button in 2023. But research over the past year showed that environmental, social and governance investments are popular with businesses, investors, and the public who see their economic value.

Despite relentless attacks from anti-ESG operatives, companies and investors are expected to significantly grow commitments to sustainability and diversity. Here are 13 recent studies to share with clients and colleagues that demonstrate the power of ESG investments to drive positive returns and reduce risk.

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The Top 15 Anticipated ESG-Related Considerations That Will Influence Strategy in 2023

Sat, 31 Dec 2022 12:39:22 GMT

This article was originally published here

The Top 15 Anticipated ESG-Related Considerations That Will Influence Strategy in 2023

1. Blackrock’s voting “democratization” will gain popularity & eventual adoption by State Street & Vanguard, thereby adding yet another drain on management’s investor engagement resources

Larry Fink’s 2022 letter to CEOs outlines an unprecedented systematic change to proxy voting and marks a potentially disruptive inflection point within the conventional proxy voting process.[1] According to Blackrock, “this option gives institutional clients in separately managed accounts (SMAs) the ability to exercise their voting decisions on the topics or at the companies that matter most to them.” In other words, Blackrock has opened the door to an entirely new roster of complex stakeholders.

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Firms Face ESG Data Demands From Business Partners, Study Says

Mon, 19 Dec 2022 13:18:53 GMT

This article was originally published here

Companies are feeling pressure from their business partners to deliver greenhouse gas and diversity data, according to a new report compiled by the law firm Thompson Hine LLP.

The report, published Monday, says 34% of companies’ customers and business partners are asking for information on greenhouse gas emissions while 25% want diversity and inclusion data.

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Climate accountability of companies and their boards

Fri, 16 Dec 2022 12:47:13 GMT

This article was originally published here

With this year’s COP27 conference calling for robust transition plans from member states and the government’s Transition Plan Taskforce launching its ‘gold standard’ framework for climate transition plans by companies, the race to achieve a 100% reduction in greenhouse gas (GHG) emissions by 2050 (net zero) is more pressing than ever before.

Businesses are not only having to navigate an ever-changing, complex, legislative & regulatory climate change framework but are also facing increasing pressure from external stakeholders to reduce their carbon footprint. Companies choosing not to take decisive action could risk exposing themselves to climate change litigation and significant reputational damage.

We set out below some key considerations and steps companies can take to help them on their way to achieving net zero.

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The Sustainability Challenge; The Sustainability Opportunity

Mon, 12 Dec 2022 12:35:38 GMT

This article was originally published here

Consensus is rapidly forming around the evident impact of climate change, the dislocations caused by deep societal fissures, and the critical need for resilient business leadership to confront them.

Following suit, companies in all sectors are facing more pressure than ever from regulators and investors, big and small alike, to become “sustainable businesses” by addressing the environmental, social and governance impact of their operations.

This growing perspective recognizes and promotes the idea that addressing these seemingly non-financial ”ESG” factors will establish the foundations for long-term business success and stability. Although these matters may seem non-financial now, a company’s role in confronting these challenges head on will indeed improve your individual bottom line, as well as the bottom lines seen across your industry sector.

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ESG can help businesses win the battle for talent

Wed, 07 Dec 2022 12:57:16 GMT

This article was originally published here

At a time of labour shortages and rising wage demands, implementing workforce ESG strategies can make an employer stand out to prospective staff and help them retain existing colleagues. The CBI recently reported that three quarters of UK businesses have been affected by labour shortages in the past year. Many companies have responded by increasing pay to retain existing staff and attract new recruits. But with companies facing spiraling energy costs, and inflationary pressures mounting, increasing the wage bill may no longer be a viable solution.

An alternative approach involves a greater commitment towards ESG (environmental, social and governance issues) where research shows that it can be a valuable tool in attracting and retaining employees.

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The sustainability-savvy board: leading the just transition

Thu, 29 Sep 2022 18:35:54 GMT

This article was originally published here

Julia Hayhoe and Iris Mol discuss the challenges dominating the agenda of business leaders most advanced in their ESG thinking.

Environmental, social and governance issues are now recognised as a strategic priority by business, investors, society and political leaders alike. What can we learn from boards already wise to the challenges and opportunities that the quest for a sustainable future present?

While sustainability and ESG issues are rising up the corporate, political and public agenda, progress towards a more sustainable future remains slow.

Ahead of the crucial COP26 climate conference in Scotland this November, a successful outcome to the talks remains very much in the balance. Governments and businesses are facing criticism for dragging feet on turning commitments into material and measurable action. There are doubts whether the world’s richest nations will meet their pledge to finance a “just transition” to a more sustainable way of life.

While many boards are sincere in their desire to operate in a more sustainable way, they face significant challenges. It calls on boards to understand the dynamic demands, opportunities and risks presented by a broad range of stakeholders. Then to make tough choices about the mindsets, behaviours and tools they need to adopt and embed within the business.

Some business leaders are clearly ahead in their thinking and are wise to the challenges, and, importantly, the opportunities, that lie ahead.

So what can businesses, and the professional firms that advise them, learn from what sustainability-savvy boards are focussing on?

Drawing on our work with boards, independent advisory roles to NGOs such as The World Economic Forum and on the latest academic research, we have distilled the top five challenges far-sighted boards are grappling with.

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How Do GCs Really Feel About Being Saddled With New ESG Responsibilities?

Fri, 24 Jun 2022 12:33:58 GMT

This article was originally published here

As regulators, investors, employees and consumers across the globe push for new laws and clear standards to hold corporations accountable for environmental, social and governance reporting, companies are increasingly tapping their legal departments to take the lead on corporate ESG or play a significant role in the effort.

At Medtronic, a global medical device and tech firm with a U.S. headquarters in Minneapolis, the in-house legal team is also the company’s ESG hub, “because legal can serve a central coordinating function for the multiple work streams that flow from the ESG program,” said Ivan Fong, the company’s general counsel.

“For all companies, but particularly in public companies, GCs play an important role in facilitating appropriate board oversight of ESG and ensuring robust review and internal assurance of company disclosures,” Fong added.

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Why climate litigators may be coming for your company

Mon, 20 Jun 2022 12:36:26 GMT

This article was originally published here

Send in the lawyers!

That seems to be the marching orders for climate activists these days. And not just the leading NGOs: Individuals, cities, Indigenous tribes, even kids are lawyering up to rush in where regulators fear to tread.

And companies are a growing target.

Lawsuits seeking to accelerate progress on reducing or eliminating greenhouse gas emissions, or addressing other environmental wrongs, have been around for decades. Among the earliest was one filed by activist economist Jeremy Rifkin in 1992, challenging several U.S. agencies that, according to the suit, did not consider the effects of climate change in their policies. It was summarily dismissed, but it helped pave the way for many others to follow.

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In-house lawyers urged to become climate change leaders

Mon, 23 May 2022 12:43:44 GMT

This article was originally published here

Legal teams are uniquely placed to influence their organisation’s response to the climate crisis, senior legal chiefs have told the Law Society’s flagship conference for in-house lawyers.

Dozens of lawyers attended Chancery Lane today to hear a keynote address on how they can drive the environmental aspect of their employer’s environmental, social and governance strategy.

Last year the Law Society published a ‘climate change resolution’ to support solicitors to develop a climate-conscious approach to legal practice, pointing out that nearly a third of the UK’s largest businesses have pledged to eliminate their carbon emissions by 2050 and requiring those who they do business with to adopt similar measures.

Adam Woodhall, chief executive of Lawyers for Net Zero, an environmental network to support in-house lawyers, told the conference that climate and environmental issues presented challenges and opportunities that required leadership. In-house lawyers, whether they are the general counsel, counsel in a legal team or an IP lawyer for a charity, can be those leaders.

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Pulse of the Profession: Survey reveals lawyers’ priorities about world problems

Wed, 18 May 2022 15:12:37 GMT

This article was originally published here

Society needs lawyers in good times and in bad. And the legal profession can and does play a critical role in addressing society’s most pressing challenges.

The social impact of the legal profession

Many lawyers went to law school to make a difference. Often, the attraction of an extremely high compensation package blurs the lines between “making a difference” and “making money.”

But the results of the current Pulse of the Profession survey reveal law firms are committed to creating transformative change.

Pulse of the Profession

In an ongoing Legal ESG Pulse of the Profession survey, lawyers throughout the legal ecosystem are invited to respond to questions about their social impact priorities. Using the United Nations Sustainable Development Goals (SDGs) as a framework, the Legal ESG Pulse of the Profession provides a real-time look at the most important, material, and relevant priorities of lawyers and for the legal profession.

The survey is conducted by ESG Intelligence Group , in collaboration with Inside Practice LLC , and my consultancy Amity Advisory LLC .

The Pulse of the Profession survey is based on the 17 United Nations SDGs, also known as the Global Goals. The SDGs were adopted by the United Nations in 2015 as a universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity.

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Reed Smith Fee-Earners Can Now Record 'Sustainability Projects' As Billable Hours As Part of 2-Year Environmental Plan

Wed, 18 May 2022 13:47:50 GMT

This article was originally published here

Reed Smith is allowing its fee-earners across the firm to record time spent on sustainability projects as billable hours, as part of a wider environmental plan.

In a firm announcement on Tuesday, it said that all timekeepers will now be able to annually designate up to 25 hours of work and activities related to sustainability projects as billable time.

Activities that fall under the ‘sustainibility project’ bracket could include attending workshops, organising sustainability related meetings or joining other external sustainability partnerships, such as the Net Zero Lawyers Alliance.

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Goodbye greenwash! How the law is being used to force corporates to act on climate change

Tue, 17 May 2022 13:44:58 GMT

This article was originally published here

Organisations and their leaders will increasingly face the financial and reputational consequences of climate change inaction, believes Alice Garton, director of global legal strategy at the Foundation for International Law for the Environment (FILE) .

Growing up in Australia’s first eco village, she set her sights on using the law to change the world at a young age. She worked for a hard-hitting litigator, spent 14 years in law firms and multinationals before moving to ClientEarth – the first NGO to look at the whole suite of laws that can be applied to combat the climate crisis. In her latest role at FILE, she’s aiming to scale climate litigation across the world.

Based on her experience, she explains the future of climate-related litigation for businesses and lawyers to Neil Pearson, Mills & Reeve’s head of ESG and social value.

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What’s Lost When We Talk ‘ESG’ and Not ‘Sustainability’

Thu, 05 May 2022 12:41:37 GMT

This article was originally published here

Over the 20 years I’ve worked at the intersection of business and society, I’ve seen many terms applied to this part of the business agenda: compliance, eco-efficiency, corporate social responsibility, socially responsible investing, green, clean, sustainability, regenerative, net zero, net positive, and many more.

Some variation in how we talk about all of this is helpful, but we also need some common language that’s both relatively easy to comprehend and interesting. In tech, for example, “blockchain” sounds much cooler than “a shared, immutable ledger for recording transactions.” In the realm of the overlap of business and society, sustainability has had the most staying power, often for lack of something more exciting.

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The Green Future Index 2022

Sat, 30 Apr 2022 15:25:24 GMT

This report was originally published here

The Green Future Index is a ranking of 76 countries and territories on their progress and commitment toward building a low carbon future. It measures the degree to which their economies are pivoting to clean energy, industry, agriculture, and society through innovation, policy, and investment in renewables.

The research for The Green Future Index 2022 concluded in January 2022, prior to the Russian invasion of Ukraine. That conflict is likely to have far-reaching and ongoing implications for the sustainability efforts of countries all around the world. While MIT Technology Review Insights has attempted to relay the most accurate information possible, we can expect the economic, social, and political climate to continue to shift.

Methodology: The Green Future Index in 2022

The Green Future Index 2022 is the second annual comparative ranking of 76 nations and territories (representing about 95% of global GDP) on their ability to develop a sustainable, low-carbon future for their economies and societies. As it was in its inaugural year, the index was developed through in-depth primary and secondary research processes. Secondary research included the review of several hundred articles, research reports and papers in scientific literature, and news and legal analysis journals. Primary research was conducted through more than 20 in-depth interviews with global experts on climate change, green energy, and decarbonization technologies.

This research process informed our evaluation and selection of 22 distinct sets of country-level data to comprise the indicators of the index. The data came from a wide range of publicly available sources, including the International Energy Agency (IEA), the International Renewable Energy Agency, the World Bank, the United Nations Food and Agriculture Association (FAO), the World Intellectual Property Organization, and the Climate Action Tracker (CAT).

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The Promise of a Positive Legacy

Fri, 22 Apr 2022 15:21:16 GMT

This report was originally published here

Twenty-two cities across North America are competing to serve as hosts for the 2026 World Cup. For the first time, FIFA is considering human rights plans as part of the host city selection criteria. Each city has published its plan, which will drive a positive human rights legacy and mitigate any negative human rights impacts of hosting this major sporting event.

The report examines the human rights themes that FIFA outlined, takes a closer look at each city plan, and collects highlights from the plans for accessibility to stakeholders. The report draws attention to the legacy opportunities that the cities envision pursuing as 2026 World Cup hosts. We also pose some important questions for host cities and broader stakeholders to consider. We hope the report presents opportunities for stakeholders to share ideas to work together to implement their proposals and advance human rights in their local context.

Putting human rights center stage will be seen as a game-changing development for the 2026 World Cup as the plans come to fruition. The bar is being set high for the sustainable future of mega-sporting events.

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'There Won't Be Any Rule Book': Skyrocketing ESG Risks Put GCs Center Stage

Mon, 11 Apr 2022 15:27:51 GMT

This article was originally published here

Managing ESG risks is becoming a hornet’s nest for legal departments, a sometimes overwhelming task that is forcing general counsel to decide where to devote their manpower.

As the range of environmental, social and governance risks expand, 99% of the 1,000 general counsel and chief legal officers surveyed in a new study by EY Law and Harvard University expect a sharp increase in the volume of work.

Legal chiefs are fretting on many fronts, fearing ESG issues will cause a loss of customers due to reputational damage, lawsuits by third parties and an increase in regulatory enforcement actions.

“This landscape is complicated by often ambiguous guidance from regulators, stakeholder pressure and competing goals within the business itself,” the study notes.

Paradoxically, all the new responsibilities are likely to increase the importance of company legal chiefs, as CEOs and other business unit leaders turn to them for guidance on the range of ESG issues.

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As Social Impact Becomes The Test, Firms Asked To Step Up

Wed, 03 Nov 2021 16:23:43 GMT

This article was originally published here

The past few years have been boom times for advocates of socially responsible business practices. The impacts of climate change, a global pandemic and a national reckoning on racial justice have pressed businesses of all stripes to take stock of their own practices, and renew their commitments to do good in the world and do better by their own employees.

These forces are putting new pressures on law firms to dust up their social impact bona fides — and some are finding that making social responsibility a strategic imperative is not just doing good, it may also be good business.

A sense of social responsibility has always been part of the legal profession. Pro bono work, the practice of providing free legal services to those in need, is built into the rules of professional conduct, with the ABA recommending that lawyers "aspire" to deliver at least 50 hours of pro bono legal services every year.

But firms are increasingly being pressed to view their social responsibility mandate as far broader than just the number of hours each attorney works on pro bono matters. Clients, attorneys, advisers and advocates are urging law firms to view social responsibility as a core part of their business strategy, rather than as a side project or something extra attorneys can do in a few hours a year.

"What law firms mostly so far have missed is that their biggest impact on society is the work they're doing for clients," said Pamela Cone, founder and CEO of Amity Advisory. "The real solution is not a few days of working on something meaningful and the rest of your life, you know, going back to the grind."

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The 2021 Law360 Pulse Social Impact Leaders

Tue, 02 Nov 2021 13:58:24 GMT

By Law360

This article was originally published here

To give firms a fresh perspective on how they compare to their competitors, Law360 Pulse has created a brand new law firm ranking, which looks at firms from multiple angles so our readers can match their own ideas of success with what they find in our data.

The legal industry often places a high priority on firms' financial success as a measure of strength, and while that's a piece of the whole, we wanted to dig deeper. Our goal is to look holistically at law firms and assess them across a broad range of categories to highlight what they're doing well and what they could improve

.

Today's publication of the Law360 Pulse Social Impact Leaders marks the first of three parts of our new ranking, with two still to come.

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CEOs unequivocally call for bold government action and consistent climate policy at COP26

Mon, 01 Nov 2021 16:01:59 GMT

This article was originally published here

CEOs say that while private sector can lead the response, mobilize the capital, and deploy the technology needed, climate change is impacting their business and supply chains much earlier than expected

UNITED NATIONS, New York, 1 November 2021 – In the largest sustainability study conducted to-date by the United Nations Global Compact and Accenture (NYSE: ACN) , only 18% of CEOs said that governments and policymakers have given them the clarity needed to meet their sustainability and climate change targets. Released today ahead of COP26 in Glasgow, business leaders are also sounding the alarm on the early onset of climate-induced disruption and looking for government action—particularly in areas of clear carbon pricing, infrastructure investment and financial commitments to an equitable net-zero transition in the Global South—as the window to meet the 1.5°C target by 2030 has started to close.

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Navigating the Landscape of ESG-Related Shareholder Litigation

Fri, 29 Oct 2021 15:59:35 GMT

By Bruce A. Ericson , Ari M. Berman , David Oliwenstein , Kimberly D. Jaimez , Roland C. Reimers

This article was originally published here

Most of the recent environmental, social, and governance (ESG)-related headlines focus on the SEC’s developing agenda under the leadership of Chair Gary Gensler, but developments in private litigation also warrant close attention. While many of the first-generation lawsuits—which focused largely on corporate board diversity—have been dismissed for failure to state a claim, companies should remain vigilant. Indeed, as putative plaintiffs incorporate lessons learned from early defeats and expand the scope of ESG litigation, market participants should continue to be mindful of ESG disclosures.

The Climate Change Roots of ESG-Related Litigation

ESG lawsuits have long predated both the SEC’s recent focus on ESG enforcement and rulemaking as well as the current wave of shareholder litigation focused on corporate diversity. Historically, high-profile ESG-related litigation often involved climate change actions against issuers in the natural resources industry.

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Climate Change Litigation: The Case For Better Disclosure And Targets

Fri, 15 Oct 2021 14:55:12 GMT

By S&P Global Ratings

This article was originally published here

The Appetite (And Success) For Climate Litigation Cases Is Arguably Growing

As the effects of climate change are realized and the global push toward decarbonization accelerates, various stakeholders--including nongovernmental organizations, investors, and communities--are increasingly turning to litigation according to some scholars on the topic. Indeed, the number of climate change-related court cases filed globally nearly doubled between 2017 and 2020, with more than 1,800 cases filed in 40 countries as of May 2021, three-quarters of which were lodged in the U.S., primarily related to corporate entities and governments (Setzer & Higham 2021). While many cases have failed or been delayed by procedural or COVID-19-related issues, there have been a number of significant rulings that may have wide-ranging implications, including the landmark case in May 2021, Milieudefensie et al., v. Royal Dutch Shell.

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Calls to action on ESG boost demand for legal expertise

Fri, 15 Oct 2021 14:52:31 GMT

By Patrick Temple West

This article was originally published here

Law firms are racing to catch up with the financial sector’s embrace of environmental, social and governance (ESG) investing as they see the potential for deals and regulations aimed at combating global warming to deliver billable hours. Nearly all the global law firms now have ESG or sustainability practices and the past year has seen unprecedented activity. From big dollar M&A deals to contracting work, the legal sector has recognised the need for ESG action.

Nearly all the global law firms now have ESG or sustainability practices and the past year has seen unprecedented activity. From big dollar M&A deals to contracting work, the legal sector has recognised the need for ESG action.

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The climate disaster is here

Thu, 14 Oct 2021 14:57:39 GMT

By Oliver Milman , Andrew Witherspoon , Rita Liu , and Alvin Chang

This article was originally published here

Earth is already becoming unlivable. Will governments act to stop this disaster from getting worse?

The enormous, unprecedented pain and turmoil caused by the climate crisis is often discussed alongside what can seem like surprisingly small temperature increases – 1.5C or 2C hotter than it was in the era just before the car replaced the horse and cart.

These temperature thresholds will again be the focus of upcoming UN climate talks at the COP26 summit in Scotland as countries variously dawdle or scramble to avert climate catastrophe. But the single digit numbers obscure huge ramifications at stake. “We have built a civilization based on a world that doesn’t exist anymore,” as Katharine Hayhoe, a climate scientist at Texas Tech University and chief scientist at the Nature Conservancy, puts it.

The world has already heated up by around 1.2C, on average, since the preindustrial era, pushing humanity beyond almost all historical boundaries. Cranking up the temperature of the entire globe this much within little more than a century is, in fact, extraordinary, with the oceans alone absorbing the heat equivalent of five Hiroshima atomic bombs dropping into the water every second.

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KPMG launches multi-year program to accelerate global solutions for Environmental, Social and Governance issues

Tue, 05 Oct 2021 18:49:29 GMT

By KPMG

This article was originally published here

KPMG plans to spend more than US$1.5 billion to focus on the ESG change agenda.

KPMG Regional ESG Hubs to be established in Europe, Asia Pacific and the Americas to support clients on their ESG journey
KPMG Emerging Markets Accelerators to deliver region-specific support and financing expertise to help developing nations
Collaborations with University of Cambridge Judge Business School and New York University (NYU) Stern School of Business Executive Education to provide comprehensive ESG training for all colleagues
KPMG firms will co-create and deliver ESG services with an ecosystem of world-leading alliances

As part of its ongoing multi-billion-dollar investment program, KPMG plans to spend more than US$1.5 billion over the next three years specifically to focus on the Environmental, Social and Governance (ESG) change agenda. The ESG strategy is designed to support KPMG firms’ clients in making a positive difference. Importantly, this strategy is underpinned by KPMG’s recognition of its responsibility to improve its impact on the world and the ESG commitments outlined in KPMG: Our Impact Plan .

The collective investment will focus on training and expanding KPMG’s global workforce, harnessing data, accelerating the development of new technologies, and driving action through partnerships, alliances and advocacy. The key to the transformation will be embedding ESG in the organization and client solutions to drive measurable change.

The new global ESG strategy focuses on five priority areas:

Solutions
Five newly dedicated Hubs are to be established to provide world-class expertise and solutions on key ESG issues, these will focus on:

Global Decarbonization, helping large multinational businesses meet their net-zero commitments and plan their decarbonization journey, and
Global ESG Advisory, backed by Advisory teams from KPMG firms, offering market-leading ESG expertise including leadership on societal issues and solutions.
Three KPMG Regional ESG Hubs will also be established in Europe, Asia Pacific and the Americas to allow clients easy access to world-class insights and expertise across the ESG agenda.

KPMG will invest in its leading climate and ESG solutions and technologies, including Climate IQ, a digital tool that helps clients identify opportunities and risks arising from climate change. To complement the technological investments, the global organization will also expand its workforce, both for ESG advisory work and to provide assurance on ESG disclosures. Additionally, KPMG will develop its proprietary audit workflow technology to enable delivery of ESG assurance with the same quality and rigor that KPMG firms apply to financial audit work.

Talent
ESG training will be provided to all of the KPMG organization’s 227,000 people to ensure that everyone is empowered to be an agent of positive change. As part of this training, KPMG is working with two leading global academic institutions, University of Cambridge Judge Business School and NYU Stern Executive Education:
The University of Cambridge Judge Business School partnership will build ESG skills including the development of a learning framework and solutions to be applied across the KPMG global organization, led by the business school faculty and other experts associated with the school, beginning with hundreds of business leaders and with the ambition to reach all KPMG people around the globe.
The NYU Stern Executive Education collaboration will see the co-creation of a sustainability program for KPMG in the form of executive education.
Supporting developing nations
KPMG will launch KPMG Emerging Markets Accelerators for developing nations in the Eastern Mediterranean, Africa, Asia Pacific and Latin America. The goal of these Emerging Markets Accelerators is to ensure areas of the world lacking expertise and resources will have a trusted advisor to support their economic and social development in line with the UN Sustainable Development Goals.
Collaborations and Alliances
KPMG recognizes that the world’s issues will not be solved by any one organization alone, which is why the global organization is building on its collaboration with external organizations including UNESCO, Enactus and the Global Reporting Initiative. Through alliances with Google Cloud , Microsoft and ServiceNow , KPMG is co-creating new tools and solutions that will provide critical insights based on data that clients can use to map their ESG journeys and implement vital changes to meet their commitments.
Listening and taking action
To help support the engagement pillar of its global ESG strategy, KPMG is also launching a new campaign called ‘Voices for a Sustainable Future’, offering a platform to amplify the views of established and new thinkers, giving voice to critical issues — from climate change to gender and race equality. The program will generate actionable insights to help accelerate the journey towards a more sustainable future.

KPMG’s global ESG strategy comes less than a year after the organization launched KPMG: Our Impact Plan, which lays out the global organization’s commitments on ESG themes, with the ultimate goal of making an even greater positive impact on the world. KPMG was the first professional services organization to transparently report against the World Economic Forum’s Stakeholder Capitalism Metrics . The plan sets out a range of targets, including a pledge to become a net-zero carbon organization by 2030. The execution and acceleration of KPMG: Our Impact Plan is a key priority for the global organization as it delivers on its commitments to tackle issues — from the climate crisis to social mobility and community engagement.

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The United Nations free-thinkers who coined the term ‘ESG’ and changed the world

Fri, 01 Oct 2021 15:14:12 GMT

By Elliot Wilson

This article was originally published here

James Gifford’s life changed when he hopped aboard a flight from Sydney in 2003. The team he joined in Geneva framed the UN’s Principles for Responsible Investment, created the concept of ‘ESG’ and changed the world. For James Gifford, the jump from building push-email programmes for Australian climate activists and sitting in Geneva framing the United Nations’ Principles for Responsible Investment (PRI) was surprisingly short.

These days, Gifford is head of sustainable & impact advisory and thought leadership at Credit Suisse in Zurich. But rewind to 2003, and you find a driven and ideological twenty-something academic with time on his hands before he kicks off a five-year economics PhD at the University of Sydney.

Instead of killing that time with leisure, he wrote to the United Nations Environment Programme Finance Initiative (UNEP FI). “I said I would love to do an internship, and that I had some ideas I’d like to contribute.”

They responded with a ‘sure, fine with us’, and so a few days later he pitched up in Geneva and got to work as an unpaid intern.

It changed his life - and in so many ways, ours too.

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Hiring the ESG Dream Team

Thu, 30 Sep 2021 15:16:15 GMT

By Dave Curran and Amelia Miazad

This article was originally published here

As many in the business world are redefining their company’s purpose—aiming to be part of the solution to societal problems—it’s an exciting time to be studying or working in corporate law. But it can also be challenging for law firms and corporations to hire lawyers who understand how to navigate these modern-day challenges in environmental, social and governance (ESG).

Law schools are creating courses on sustainable capitalism and ESG. Law firms are also stepping up to meet client demand for advice on how to manage an evolving space and rapidly changing regulations.

But many legal teams can’t wait for legal education to catch up. They need to hire people now who have ESG knowledge and skills—which is creating a multitude of career opportunities that law students and lawyers can seize. Industry veterans’ roles are also evolving, with new opportunities on the horizon.

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COP26: What is the Glasgow climate conference and why is it important?

Fri, 24 Sep 2021 15:18:07 GMT

By BBC

This article was originally published here

What is COP26 and why is it happening?

The world is warming because of fossil fuel emissions caused by humans.

Extreme weather events linked to climate change - including heatwaves, floods and forest fires - are intensifying. The past decade was the warmest on record, and governments agree urgent collective action is needed.

For this conference, 200 countries are being asked for their plans to cut emissions by 2030.

They all agreed in 2015 to make changes to keep global warming "well below" 2C above pre-industrial levels - and to try aim for 1.5C - so that we avoid a climate catastrophe.

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Winston & Strawn Launches ESG Advisory Team

Wed, 25 Aug 2021 14:50:23 GMT

By Winston & Strawn

This article was originally published here

The global law firm of Winston & Strawn LLP today announced the formation of a new Environmental, Social, and Governance (ESG) Advisory Team. Co-chaired by Houston-based partners Mike Blankenship and Eric Johnson, the advisory team synthesizes the firm's multidisciplinary experience to help boards and management teams oversee the complete spectrum of ESG-related legal and business issues.

"Amid an ever-changing business environment, it's clear that the most resilient and successful businesses are placing ESG principles at the forefront of their core values and leveraging those principles to chart a path for financial success and future growth to the benefit of all their stakeholders, including employees, customers, vendors, local communities, and stockholders," said Blankenship.

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Extinction Rebellion confirms plans to target City law firms

Wed, 25 Aug 2021 14:39:09 GMT

By Jemma Slingo

This article was originally published here

Extinction Rebellion activists are expected to target City law firms in a wave of protests in London over the next two weeks.

The campaign group told the Gazette that protesters will focus on legal services, financial services and insurance services, which have made a ‘real contribution to the crisis’. They have not disclosed any specific plans, however.

A spokesperson for Extinction Rebellion said the City of London is the ‘arch-financier’ of the carbon economy and is ‘knowingly investing in the destruction of the conditions which make the planet habitable’.

‘It supports 15% of global carbon emissions around the world. It hosts BP, Shell, Glencore, Anglo-American and Russian Oil and Gas companies such as Gazprom and Rosneft. The world’s largest energy company Saudi Aramco raised $12bn via UK debt-markets. These deals are supported by our top City law-firms and our insurance industry, the critical enablers of the carbon economy.’

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‘You are all climate lawyers now,’ John Kerry tells ABA

Tue, 10 Aug 2021 14:37:39 GMT

By Karen Sloan

This article was originally published here

No practice area will be untouched by climate change, special envoy warns
Law firms face greater climate scrutiny over clients, carbon footprints

Lawyers across the profession have a vital role in fighting climate change and assisting those struggling with its effects, John Kerry said Thursday in an address to members of the American Bar Association during its annual meeting.

The former Secretary of State, the first-ever United States Special Presidential Envoy for Climate, warned that the planet is on the path to catastrophe, and meeting the “challenge of our times” will require greater coordination among nations and more aggressive emissions-reduction commitments from them.

But there is a window of opportunity to turn the tide if countries - and lawyers - act quickly, said Kerry, who addressed the ABA virtually. (The ABA is holding its first hybrid annual meeting, with some events happening online and others in-person in Chicago.)

“You are all climate lawyers now, whether you want to be or not,” said Kerry, who obtained his J.D. from Boston College in 1976.

“Facts, evidence, and science all make clear that we have a narrow window to avoid the worst consequences of this crisis, and there is a place for lawyers to help hold back the tide and create new pathways.”

No practice area will be untouched by the climate crisis, Kerry warned. Lawyers and non-profit attorneys are needed to assist people in the aftermath of devastating climate-change-driven storms and fires, he noted. Bankruptcy lawyers will need to assess the infrastructure risks of their clients and advise them on safer, wiser planning. Transactional lawyers will be crucial in the many deals necessary to expedite the transition to greener energy and support the adoption of innovative technology, he said. Construction, procurement, and land use are all areas where lawyers will have to grapple with the impact of the climate crisis, Kerry added.

“Some of you will write the laws that will drive these transformative interventions,” Kerry said. “Others of you will administer and enforce them. And some of you may negotiate the international arrangements that help the world address the climate crisis in all its manifestations.”

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Commissioner Peirce offers Brookings her views on ESG

Fri, 06 Aug 2021 16:24:16 GMT

By Cydney Posner

This article was originally published here

On Tuesday, the Brookings Institution held a panel discussion regarding the role that the SEC should play in ESG investing. In describing the event, Brookings said that ESG issues “continue to climb in importance for many investors and policy makers. What role should public policy and financial regulation play in response to ESG concerns?

These questions are of particular importance for the [SEC] tasked with protecting America’s capital markets and American investors.” You might have assumed that Brookings would have invited as the speaker one of the SEC’s fervent advocates for more prescriptive ESG disclosure regulation, such as Commissioner Allison Herren Lee. But instead, Brookings invited the contrarian Commissioner Hester Peirce as the SEC representative.

As an opponent of the SEC’s venturing into the mandatory ESG metrics disclosure business, Peirce came prepared to engage, armed with a voluminous speech consisting of 10 theses, footnoted to the hilt. Recognizing that “whether and how we will move toward a more prescriptive ESG disclosure framework” is now front and center on the SEC’s current agenda, Peirce offered ten theses “without much sugar-coating” in the hopes of catalyzing “a textured conversation about the complexities and consequences of a potential ESG rulemaking.”

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Crypto, Meet ESG; ESG, Meet Crypto

Fri, 06 Aug 2021 16:17:57 GMT

By Gary DeWaal , Christian Hennion , Neil Robson , Allison Yacker ,

This article was originally published here

The blockchain technology that powers cryptocurrency originated in an obscure white paper, anonymously published under the name Satoshi Nakamoto in 2008. In the 13 years following its publication, the cryptocurrency industry has exploded and is now valued at over $2 trillion. 1 The increasing interest from investors in Bitcoin (which accounts for over 50 percent of the cryptocurrency market capitalization), 2 DogeCoin, Ethereum and other cryptocurrencies has brought significant public and regulatory interest to the space. In particular, members of the public and regulators have increasingly focused on the degree to which cryptocurrencies either positively or negatively impact the broader communities in which they operate.

Environmental, Social and Governance (ESG) criteria are standards for a company’s operations that investors have begun using to either screen out potential investments that have deleterious effects (according to the criteria), or to modify the criteria for making new investments in a manner harmonious with the ESG criteria. 3 Environmental considerations include, for example, a company’s energy use and pollution. Social criteria often examine how a business carries out its relationships, including with clients and suppliers or among its employees. Governance concerns generally relate to how transparent a company is, the composition of its board and holding boards accountable for the promises that they make to their shareholders. ESG’s popularity continues to grow alongside crypto assets. Last year, the more than $50 billion invested in sustainable mutual funds and ETFs set a new record. 4 This growth comes as the Biden administration recently issued an executive order seeking to revise rules that limited investments focused on ESG factors in retirement accounts. 5 Wealth managers across the country have acknowledged that a focus on ESG investments can offer long-term stable returns and enhance sustainability.

While ESG and crypto assets have both been independently gaining popularity, investors have yet to draw significant links between ESG and crypto assets. This advisory discuss these links and will focus on the relationship between ESG investing considerations and the future of cryptocurrencies and crypto assets.

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Incoming Changes for Corporate ESG Accountability in European Union

Fri, 06 Aug 2021 16:16:10 GMT

By CHRIS WARREN-SMITH , XAVIER HARANGER , JESSICA GORDON

This article was originally published here

Companies doing businesses in the European Union should note an important development that could introduce a duty of care for companies. On 10 March 2021, the EU Parliament approved an outline proposal for an EU Directive on Mandatory Human Rights, Environmental and Good Governance Due Diligence (Directive). The proposal, if implemented, would become EU law, after which member states would have two years to implement it. The Directive would have a significant impact on corporate accountability within the European Union.

The proposal follows a period of heightened political awareness, in Europe and worldwide, of the need for a more sustainable and responsible economy and society where environmental, social, and corporate governance (ESG) is an integral part of companies' long-term business strategies. The EU Parliament resolution containing recommendations to the EU Commission noted that “around the globe there are around 25 million victims of forced labour, 152 million victims of child labour, 2,78 million deaths due to work-related diseases per year and 374 million non-fatal work-related injuries per year,” and that, according to a Commission study, “only 37% of business respondents currently conduct environmental and human rights due diligence.” Other studies have shown that firms that had invested in ESG strategies and activities before the COVID-19 pandemic were more resilient to the economic crisis that it caused.

The Directive is aimed at ensuring that companies operating in the internal market “fulfil their duty to respect human rights, the environment and good governance and do not cause or contribute to potential or actual adverse impacts on human rights, the environment and good governance through their own activities or those directly linked to their operations, products or services by a business relationship or in their value chains, and that they prevent and mitigate those adverse impacts.”

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Deloitte to Provide Climate Learning for All Global Employees

Wed, 04 Aug 2021 16:02:35 GMT

By Mark Segal

This article was originally published here

Professional services giant Deloitte announced today the launch of a new climate learning program for all of its 330,000 global employees. The program, developed in collaboration with World Wildlife Fund (WWF), is designed to engage employees on the impacts of climate change, inform them about how Deloitte is responding to the climate crisis, and inspire them to take action.

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Signs of the times: Environmental related ESG offerings

Tue, 03 Aug 2021 16:20:58 GMT

By Jennifer A. Smokelin , Megan Haines , Daniella D. Landers , Todd O. Maiden and Ben H. Patton

This article was originally published here

A number of signs point to the fact that public companies should expect increased scrutiny on whether their environmental-related ESG offerings, practices and controls are consistent with their disclosures, claims and marketing material.

SIGN #1: The Securities and Exchange Commission (SEC or Commission) announced that New Jersey Attorney General Gurbir Grewal will become the next director of its Enforcement Division (Division), after resigning his New Jersey’s attorney general position on July 26.

SIGN #2: On July 29, the SEC announced charges against a founder, former CEO and former executive chairman of a publicly traded corporation, for allegedly repeatedly disseminating false and misleading information – typically by speaking directly to investors through social media – about the corporation’s products and technological accomplishment. In a press conference announcing this enforcement action, Grewal stated, “We will hold all those who make materially false and misleading statements accountable…,” announcing his department’s priorities loud and clear.

SIGN #3: As New Jersey Attorney General, Grewal sued major energy and chemical companies as part of an environmental justice initiative. Grewal has an environmental bent.

SIGN #4: As previously reported on this blog, in March, Acting Chair Lee announced the creation of a Climate and ESG Task Force. The task force is composed of 22 members drawn from various Commission offices and specialized units. The Climate and ESG task force is charged with developing initiatives to identify ESG-related misconduct and analyzing data to identify potential violations. Additionally, the task force aims to identify misstatements in issuers’ disclosure of climate risks and to analyze disclosure and compliance issues related to ESG stakeholders and investors. The SEC has also established a website and intake submission form for tips, referrals, and whistleblower complaints for ESG-related issues. Grewal is expected to work closely with this task force and other SEC Divisions and Offices, including the Division of Corporation Finance, Investment Management, and Examinations. Expect Grewal to use this Task Force to push enforcement.

In sum, the signs above all point to increased SEC enforcement scrutiny on policing potentially misleading environmental statements in the ESG arena. Companies should confirm through strong governance that these environmental claims are in line with disclosures, claims and marketing material.

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Clients Are Aware of These Red Flags Within Law Firm ESG Practices

Tue, 03 Aug 2021 15:48:51 GMT

By Dan Packel

This article was originally published here

A common misperception at law firms is a "sense of immunity" that they can advise clients on ESG issues without ensuring that their own house is in order.

When the tiny activist hedge fund Engine No. 1 won a proxy fight in May and captured two seats on Exxon Mobil’s board, it crystalized the degree to which investors are embracing environmental, social and governance concerns.

A number of much more significant institutional investors, including BlackRock, Vanguard and State Street, ultimately supported the fight, stunning the largest publicly traded energy company in the world.

Law firms are paying attention, too. Pressure from investors and the political arena means that boards and general counsel are looking for ways to neutralize risks, and they are seeking outside counsel’s help. But as more law firms launch ESG practices and consider themselves experts on the subject, general counsel are increasingly aware of some red flags within Big Law practices.

One common misperception that law firms have, according to Amity Advisory founder and CEO Pamela Cone, is a “sense of immunity” that they can advise clients on these issues without ensuring that their own house is in order.

Clients are quick to note this misstep.

“Quite often, general counsels say, the difference is not really the technical legal substantive capabilities, but when they see [firms] walking the walk,” said former Baker & McKenzie global chief strategy officer Julia Hayhoe, now a consultant.

One indication that firms are getting it right, she quotes one general counsel as saying, is seeing associates taking an active role on a client team: “When there’s young talent, diverse talent, and they’re talking about their firm’s credentials in a very passionate way,” that’s a good sign, she said.

Another shift in mindset needs to take place at the leadership level, according to Cone. The firm’s ESG strategy can’t be the responsibility of a group of volunteers, nor can it be tacked onto the docket of someone in the marketing department.

“It really needs to be part of firm leadership strategy,” she said.

According to Cone, one general counsel ignores law firms’ reports on their ESG efforts and instead asks firm lawyers three questions: “Who’s in charge? To whom do they report? And is there a standing item on the board agenda?”

“The answer to those three questions tells him everything he need to know about how seriously the law firm is taking its social responsibility and sustainability programs,” she said.

Freshfields Bruckhaus & Deringer global partner for client sustainability Tim Wilkins said that he’s frequently fielding other questions from clients about Freshfields’ own strategies.

“We are seeing clients ask for your sustainability credentials, as well as we’ve seen in the past for your diversity credentials,” he said. “They’re right to ask this. Being a leader in becoming carbon neutral, I think, shows clients that we understand the challenges they’re facing as they move toward their goals of being net-zero before 2030.”

But one final mindset change for law firms, according to Cone, is recognizing that the greatest social impact they can have won’t stem from their own endeavors, but rather from the work they’re doing for clients.

“Most put out reports about pro bono, diversity and inclusion, end-of-the-year charitable giving, special programming,” she said. “That’s all immaterial compared to the impact on society of the work itself. I would love to see law firms celebrate this.”

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Three Ways Chief Legal Officers Can Lead the Way on ESG

Fri, 30 Jul 2021 15:51:00 GMT

By Lori Lorenzo and Kristen Sullivan

This article was originally published here

Recently, environmental, social and governance (ESG) issues have risen to a position of prominence for many organizations. In fact, 90% of the S&P 500 published some form of ESG disclosure in 2020, an increase from the 20% in 2011.

The drive to a more strategic focus around ESG risks and opportunities is often fueled by the growing expectations of stakeholders consumers, industries and other external communities . Growing expectations from stakeholders require a more intentional focus around ESG factors to drive long-term value. Simply put, a broadened corporate decision-making framework that encompasses ESG often encompasses delivering value to all stakeholders as a means to driving shareholder value.

Combine the chief legal officer’s (CLO) or general counsel’s (GC) typical deep understanding of risk, exceptional communication skills and standing as the established conscience of an organization—and it’s easy to see how well positioned the CLO/GC role is to help guide ESG programs as priorities shift and evolve.

A 2021 Association of Corporate Counsel survey found that 15% of CLOs say ESG reports to them, and another 8% felt it should .

Whether they directly oversee ESG efforts or not, CLOs have an opportunity to take on a leadership role in bringing these practices into the fold. But, where to begin?

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ESG – How well equipped are you to help your clients succeed?

Thu, 29 Jul 2021 16:10:37 GMT

By Julia Hayhoe

This article was originally published here

Talk to almost any GC in almost any sector and you will find one acronym that is increasingly on their minds and on their lips – ESG.

Environmental, Social and Governance issues are atop of the board agenda and are, therefore, a constant preoccupation for General Counsel and in-house legal teams.

If you are in any doubt about how significant ESG has become, just get a group of leading general counsel from very different sectors together and ask them.

That’s just what we did this summer when, as part of The Lawyer’s Marketing Leadership Summit , we brought together a panel of four leading GCs for a webinar on: “Choosing your ESG partner”.

It gave insight into GCs needs, and tested whether legal providers are providing the right support to in-house legal and the broader businesses. Importantly it was also a chance to ask – if not, then what are they getting wrong?

So why this focus on ESG issues now?

It is partly due to the growing urgency for action to tackle Climate Change. As we near this Autumn’s COP26 climate conference in Glasgow, demands for coordinated global action by governments, businesses, NGOs and consumers are intense, especially as we experience first-hand the terrible impact of Climate Change.

But ESG, of course, goes further than Climate Change, as vital as that issue is, to its roots in the shifting business agenda towards Stakeholder Capitalism and the longer-term approach to creating and protecting value for businesses’ material stakeholders. As The British Academy articulates today’s business paradigm shift: “The purpose of business is to profitably solve problems of people and planet, and not profit from causing problems.”

There is growing pressure for a “Just Transition” to a green economy, referenced in the Paris Climate accord and the acutely revealed inequalities throughout the Pandemic. A Just Transition is inherent to the UN’s 17 Sustainable Development Goals, encompassing not just climate, but systemic issues of reducing inequality, creating decent and high-quality jobs and providing equal access to resources like clean energy and water. Companies are being pressed to act by (and be transparently accountable to) a breadth of stakeholders – consumers, employees, investors, regulators, media.

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ESG – Recent Developments in Global Sustainable Finance

Wed, 28 Jul 2021 16:07:38 GMT

By Richard Hayes , Marisa Murillo , Kitt A. Ritter , Kevin R. Szu-Tu

This article was originally published here

With an intense focus on sustainability by governments, companies, investors and financial intermediaries, environmental, social and governance (“ESG”) principles are more important than ever. The explosion of net-zero emissions commitments from companies and countries in an effort to slow global warming under the Paris Agreement are being met by a rapid rise in sustainable debt financings from US$160 billion in 2019 to US$750 billion in 2020 to over US$2 trillion in the first five months of 2021 alone, according to Bloomberg. ¹ Lenders are working with domestic and multinational borrowers in industries as diverse as water, aviation, and food and beverages to incorporate innovative debt financing terms. This article will provide an overview of the principle guidance approved by loan market associations and will discuss some of the mechanisms for using credit pricing to incentivize sustainable behavior.

Sustainable Lending Guidance Overview

The Sustainability Linked Loan Principles and Guidance Notes (“SLLPs”) that were jointly published by the Loan Market Association, Asia Pacific Loan Market Association and the Loan Syndications and Trading Association in 2019 and updated in May 2021 are shaping deal structures and documentation around the world. There are two methods through which a company may tap into the “green” loan market. One method is a green loan (a “GL”), which is a type of loan instrument made available to finance a green project in categories including renewable energy, energy efficiency, pollution prevention and control, climate change adaptation, green buildings, and other related categories.

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Congress A Step Closer to Making Corporate ESG Disclosure Mandatory

Tue, 06 Jul 2021 13:34:05 GMT

By Isa Mirza

This article was originally published here

On June 16, 2021, the U.S. House of Representatives passed legislation that would impose new ESG due diligence and disclosure requirements on publicly traded companies. H.R. 1187 – the ESG Disclosure Simplification Act of 2021 – would require publicly traded companies to disclose their commitments to ensuring that environmental, social (human rights), and good governance standards (ESG) are reflected in their operations, activities, and supply chains.

The Legislation’s Impact on ESG Due Diligence and Disclosure

Specifically, Section 3 of the Act would mandate that public companies listed with the U.S. Securities and Exchange Commission (SEC) disclose at their shareholder meetings “a clear description of the views of the [SEC-listed company] about the link between ESG metrics and the long-term business strategy” of the company; and “a description of any process” the company uses to “determine the impact of ESG metrics on the long-term business strategy” of the company. Subsequent rulemaking would also define the ESG metrics that are to be disclosed and set requirements for corporate disclosure of ESG metrics in audited financial statements.

H.R. 1187 would also establish the Sustainable Finance Advisory Committee, (SFAC) a permanent body that would have no more than 20 members and that would advise the SEC on ESG metrics, standards, and disclosure. Within 18 months after the SFAC’s first meeting, the body would be required to issue a report that identifies challenges and opportunities for investors associated with sustainable finance and recommend policy changes that facilitate the flow of capital towards sustainable investments, particularly environmentally sustainable investments.

Section 4 of the Act would require that the SFAC submit to the SEC recommendations regarding what ESG metrics the SEC should require companies to disclose. Additionally, the Act would allow the SEC to incorporate any internationally recognized, independent, and/or multi-stakeholder ESG disclosure standards in defining ESG metrics and the disclosure process.

The Act was drafted by the House Financial Services Committee. Since coming under Democratic control in 2019, the Committee has spearheaded a passel of legislative initiatives that are focused on increasing accountability and social responsibility within the corporate sector.

In championing the legislation, the Financial Services Committee noted that (1) the SEC does not currently require companies to disclose information related to their ESG commitments, nor does it require companies to adhere to standards for disclosing such information; (2) investors have reported that voluntary disclosures of ESG metrics are inadequate; (3) statutes and regulations requiring reporting and standardization of ESG disclosures are in the interest of investors; and (4) ESG standards are “material to investors,” meaning the SEC is obligated to establish standards for disclosure of such matters.

Towards a Mandatory ESG Standard

H.R. 1187 comes at a time when expectations for corporate social responsibility have become more fulsome and expansive. Shareholders and consumers alike expect companies to meaningfully fulfill their corporate responsibilities as prescribed by the U.N. Guiding Principles on Business and Human Rights (UNGPs). The UNGPs establish a strong expectation that companies will identify salient harms their activities might engender, remedy such harms when they occur, and make changes to their policies and operations that can help prevent future harms.

With the mainstreaming of ESG has come a clearer understanding that environmental sustainability is also a human right, and risks associated with climate change have the potential to severely undermine the enjoyment of rights. In principle, the standard that is emerging around ESG establishes a more nuanced and holistic corporate responsibility to prevent harms. At the same time, countries in which some of the largest multinational companies are domiciled are moving in the direction of making ESG due diligence and disclosure mandatory.

Leadership at the SEC recently signaled that the agency will make ESG reporting binding on SEC-listed companies. At a whole-of-government level, on May 20, 2021, President Biden issued an Executive Order to address predicted financial instability in the federal government as a result of climate change. This Executive Order showcases how the Biden Administration’s stance towards corporate ESG standards will differ dramatically from that of the previous administration.

While the Executive Order’s policy and regulatory scope is mainly limited to the federal government and its contracts, it has potentially significant implications for the private sector. The Executive Order expects companies to collaborate on efforts to ensure “economic opportunity, worker empowerment, and environmental mitigation, especially in disadvantaged communities and communities of color.” On the whole, the Executive Order is part of a growing trend in the Biden Administration of promoting corporate ESG standards and principles.

Internationally, the E.U Parliament earlier this year passed a landmark piece of legislation that paves the way for binding regulations setting a corporate duty of care centered around ESG due diligence and disclosure. The regulations, which will likely be promulgated by the European Commission later this year, will require both small and large companies operating in the European market to respect human rights, protect the environment, and comport with ethical business practices in their operations and supply chains, including through their direct commercial partnerships with other business entities and suppliers.

Next Steps

Positions on H.R. 1187 in Congress are currently divided on a party line basis; the vote on final passage in the House received no support from Republicans.

Senate Majority Leader Chuck Schumer (D-NY) will now consider whether to schedule H.R. 1187 for a vote in the Senate, aware that the bill will need support from 10 Republican Senators in order to pass in that chamber and become law. If Senate Republicans were to support the measure, they would likely first insist on changes to key provisions in the current text.

Regardless of the outcome, ESG due diligence and disclosure are fast becoming incumbent on companies active in both U.S. and international markets. Although H.R. 1187 may not become law, the Biden Administration has made ESG a greater focal point of its regulatory agenda, while Congress and international jurisdictions will likely advance other measures aimed at standardizing and mandating ESG.

Continued

Will Mandated ESG Disclosures Lead to Increased Litigation Risk?

Thu, 01 Jul 2021 13:33:10 GMT

By Keith Blackman , Joshua Klein and Mary Curry

This article was originally published here

With the Securities and Exchange Commission resolute in its efforts to establish new disclosure requirements related to environmental, social and governance (ESG) risks, companies appear increasingly resigned to some measure of mandatory reporting. But these companies haven’t yet given up: in an effort to contain litigation risk, they continue to press the SEC to show some flexibility in the means by which ESG risks are reported.

On March 15, 2021, the SEC issued a request for public comment on climate change disclosures. The Commission asked potential respondents to address fifteen different considerations, including the types of information to be disclosed, the possibility of varying reporting standards by industry, and the potential incorporation of existing voluntary disclosure frameworks. By the time the comment period closed on June 14, 2021, more than 400 individuals or entities had submitted comments, and the SEC had held more than 40 meetings with market participants. While the majority of public commenters seemed to accept some form of mandatory reporting, submissions varied on specific reporting methodology.

In perhaps the most anticipated comment—a joint letter filed on June 11, 2021 by tech giants Amazon, Alphabet, Autodesk, eBay, Facebook, Intel and Salesforce—the companies implored the SEC to keep climate change reporting out of public filings. While reiterating the companies’ commitment to combating climate change, the joint letter recommended that the SEC require companies to furnish—not file—their climate change disclosures with the Commission. According to the group, “Given that climate disclosures rely on estimates and assumptions that involve inherent uncertainty, it is important not to subject companies to undue liability, including from private parties.” ¹

The distinction between furnishing and filing climate change disclosures is not purely semantic, as filed disclosures are held to a higher regulatory standard than those that are merely furnished. Of primary concern to the commenting companies, if false or misleading ESG disclosures are filed with the SEC, they could form the basis for a private right of action under Section 18 of the Securities Exchange Act. Furnished disclosures, on the other hand, are exempt from Section 18 liability—though companies furnishing data would remain liable under other provisions of the Exchange Act, including for material misstatements and omissions in connection with the purchase or sale of securities. Notably, there is precedent for requiring disclosures to be furnished rather than filed, including for companies reporting oil and gas extraction and mining payments to foreign governments under the Dodd-Frank Act.

Interestingly, the Amazon group may have a sympathetic ear on the Commission. SEC Commissioner Elad Roisman has publicly expressed his hesitation to require climate change data in filings, emphasizing that the SEC’s disclosure framework already mandates the filing of all information that a reasonable investor would find material. Earlier this month, Commissioner Roisman suggested that, if mandatory ESG reporting were to be adopted, the SEC should institute a safe harbor for companies who are “earnestly trying” to disclose forward-looking ESG information. ² And on June 22, 2021, Commissioner Roisman expressed skepticism as to whether the SEC is even the appropriate agency to regulate climate change disclosures at all. ³

Not all companies are advocating for the same scope of protection from liability. Walmart and Chevron submitted separate letters, advocating for a hybrid approach. Walmart proposed that the SEC require companies to submit certain reports in annual filings, and then encourage other ESG disclosures to be furnished outside of filings. For its part, Chevron proposed a phased approach to reporting, citing the ability of the SEC to focus on requesting the most important data first.

It is no surprise that comments from the investor and non-profit sectors propose a different approach, advocating for wholesale inclusion of climate change disclosures in public filings. Citing the SEC’s critical oversight role here, and a concern that the lack of a filing requirement would not yield thorough enough climate data for review, groups like the Forum for Sustainable and Responsible Investment are steadfast in their insistence that “[d]isclosures should be in annual and quarterly SEC filings.” ⁴

While the SEC is actively considering these measures, it is not the only governmental entity focused on ESG disclosure issues. On June 16, 2021, the House of Representatives narrowly passed the Corporate Governance Improvement and Investor Protection Act, which would require disclosures regarding greenhouse gas emissions, fossil-fuel and related assets, and risks associated with climate change. In the aftermath of the bill’s passage, Senate Republicans on the Banking Committee wrote a letter to the SEC, denouncing the bill and arguing that it is “misguided and will potentially have little to no effect on reducing [greenhouse gas] emissions.” ⁵ In fact, these senators oppose the SEC’s involvement altogether, arguing that “federal securities regulations are not the appropriate vehicle to advance climate change policy goals.” ⁶ At the same time, the White House released a public statement endorsing the bill and touting its potential financial benefits to Americans. Given the likelihood of a Republican-led filibuster in the Senate, however, the odds of a legislative solution are slim at best.

Though the window for input has closed, the SEC’s work is far from over. Bracewell is awaiting the SEC’s decision on the precise methods of disclosure and is prepared to assist companies in navigating the ESG disclosure landscape. Bracewell has a multi-disciplinary team focused on ESG issues, which draws on our expertise in environmental strategies, securities matters, regulatory issues, government enforcement, commercial litigation, and crisis management, as well as being at the forefront of the transition to sustainable energy.

Continued

Recent ESG-Developments Affecting The Energy Industry

Thu, 01 Jul 2021 13:19:42 GMT

By Kerry E. Berchem , Cynthia M. Mabry , Kenneth J. Markowitz , Jeffrey Lazar Kochian & Kevin W. Schott

This article was originally published here

On Wednesday, May 26, 2021, a series of events transpired that could have long-lasting impacts on the energy industry and which seem likely to accelerate that industry’s evolving responses to environmental, social and governance (ESG) issues. In what is being widely reported as a significant victory for shareholder activists focused on climate issues, Engine No. 1, supported by some of Exxon’s largest investors, gained three seats on Exxon’s board of directors. In addition, a significant majority of Chevron’s shareholders approved a resolution backing a call for the company to cut emissions from the end-use of its energy products. Finally, in what is being characterized as a “landmark” ruling with significant implications for the energy industry and beyond, a Dutch court found that Shell has contributed to climate change and ordered one of the world’s largest energy producers to slash its carbon emissions by 45 percent by the end of 2030.

Climate Activists Elected to Exxon Board of Directors

In what may prove to be a significant development in terms of how climate issues may impact corporate governance more broadly, three directors nominated by Engine No. 1 won seats on Exxon’s board of directors. Engine No. 1 nominated four directors for consideration at the company’s annual meeting of shareholders. Two nominees were elected following the initial vote count during the meeting, while the status of the third nominee was not clear until the company disclosed “preliminary” voting results in a Form 8-K filed on June 2, 2021. A fourth nominee was not elected. The relatively small investment fund’s efforts were backed by some of Exxon’s largest investors, including BlackRock. As we discussed in February , BlackRock and other large asset managers have been updating proxy voting guidelines and are at the forefront of pushing boards of directors to “address board quality and composition issues, emphasizing its commitment to net zero emissions and climate risk disclosures.” In Exxon’s case, BlackRock, which reportedly owns approximately 7 percent of Exxon’s issued and outstanding common stock, indicated that Exxon’s board needs to “further assess the company’s strategy and board expertise against the possibility that demand for fossil fuels may decline rapidly in the coming decades.” Following the election of its third nominee, Engine No. 1 stated that “Exxon’s future financial stability depends on the company diversifying its operations.”

Shareholders Approve Resolution Requesting Chevron to Focus on Cutting End-User Emissions

In another significant ESG-related development for the energy industry, Chevron’s shareholders adopted a resolution requesting the company to slash carbon emissions by consumers of its fuel products. The resolution, which was supported by approximately 61 percent of the company’s shareholders, calls on Chevron to focus on cutting what are known as “Scope 3” emissions, which are emissions generated by the end-users of energy products. The resolution reflects broader efforts by climate-focused activists to compel energy producers to focus on selling fewer products that contribute to climate change, rather than producing energy in a more environmentally friendly manner or producing “cleaner” products.

Court Rules Shell Must Accelerate Cutting Emissions

In what is widely being characterized as a watershed, albeit controversial, ruling, a Dutch court found that Shell has significantly contributed to climate change and ordered the energy company to cut its carbon emissions by 45 percent no later than 2030. The court’s ruling comes shortly after its shareholders approved the company’s “energy transition strategy.” Several media reports characterized that strategy as containing “detailed plans of the company’s targets and actions to reduce emissions and promote a net zero future, including short- medium- and long-term emissions reductions goals, the company’s decarbonization strategy and milestones and its capital allocation plans.” The judge in the case, however, was not persuaded, stating that the company’s transition strategy was subject to too many conditions and not sufficiently specific relative to achieving milestones. While several energy industry observers do not believe the judge’s ruling will survive on appeal, this ruling is likely to cause market actors to continue evaluating how climate issues present operational, reputational and legal risks to their businesses, as well as reinforcing the need for mitigation strategies relative to those risks. Shell’s CEO recently stated that while it disagrees with the ruling and intends to appeal, it will nonetheless “rise to the challenge” of meeting the court’s ruling and it does not change Shell’s commitment to reducing emissions. Rather, the ruling represents “an acceleration of our strategy…to become a net-zero emissions business by 2050, in step with society’s progress towards achieving the goal of the Paris Agreement.”

What Does It All Mean?

Each of these developments may be expected to have significant impacts in the United States, as well as in Europe and the United Kingdom. In the United States, for instance, the impact of these developments, taken together with recent pronouncements by the U.S. Securities and Exchange Commission (SEC) and others, suggests that companies across a wide array of industries need to continue focusing on ESG issues, particularly in areas relating to climate change. The SEC is clearly concentrating on a wide variety of ESG-related issues, having recently launched an ESG-focused web page and announcing that ESG issues are expected to be a point of emphasis for 2021 examinations. Relatedly, as we discussed recently , at the Conference on Market Regulation, SEC Chair Gary Gensler discussed the SEC’s ongoing efforts to develop a robust reporting framework for ESG issues and it has been widely reported that SEC staff and other federal lawmakers are particularly focused on developing more qualitative and quantitative disclosure requirements for climate-related issues. For instance, congressional Democrats recently reintroduced the “Climate Risk Disclosure Act , ” which is intended to require the SEC to promulgate one or more rules requiring public companies to include disclosures regarding how climate change potentially affects their business operations and how these risks are being mitigated. It is clear from the Exxon board vote that shareholder activists are committed to making a significant push for companies to more aggressively address ESG considerations as part of their broader strategic and commercial decision-making processes.

In addition, across Europe, governments are continuing to expand the scope and applicability of regulations relating to climate risk disclosures as well as announcing new measures. As we discussed in a recent blog post , for instance, the Financial Conduct Authority (FCA) recently launched two consultation papers on new mandatory climate-linked disclosure requirements for FCA-authorized asset managers, certain investment advisors, life insurers, certain pension providers and standard listed companies. Additionally, European energy companies also continue to face increasing levels of shareholder activism regarding their energy transition strategies consistent with the shareholder activism faced by corporates in the United States. One shareholder activist group, Follow This, was, once again, very active in the annual general meeting (AGM) season this year, proposing climate related resolutions at the general meetings of a number of traditionally oil and gas focused companies which, broadly speaking, called for a more aggressive reduction in emissions. Finally, we also expect to see increasing levels of climate change litigation across Europe targeted at corporates and governments. As a recent post-Shell example, environmental activists have recently launched a claim in the European Court of Human Rights requesting the court to rule that Norway’s drilling for oil in the Arctic breaches human rights–an indication that a new wave of human rights based litigation (as opposed to liability based litigation seeking damages for past actions) may be on the horizon following the Shell decision.

Continued

Keynote Address at the 2021 Society for Corporate Governance National Conference

Wed, 30 Jun 2021 14:38:28 GMT

By Allison Herren Lee

This article was originally published here

Good morning and thank you for the invitation to speak today at the Society for Corporate Governance 2021 National Conference. I’m impressed with your full and informative agenda over the next few days, and I appreciate the important work you do in supporting company boards and executives.

I also appreciate your engagement in the SEC’s policymaking process, including your recent letter in response to the request for public input on climate change disclosures. In fact, we’ve received thousands of comments in response to that request, but we hardly need that statistic to understand that the subject of climate risk and our financial markets, and ESG more broadly, is top of mind in board rooms and c-suites around the globe.

Increasingly, boards of directors are called upon to navigate the challenges presented by climate change, racial injustice, economic inequality, and numerous other issues that are fundamental to the success and sustainability of companies, financial markets, and our economy. This call, welcomed by some and eschewed by others, is attributable in part to the large and growing influence that corporations hold over the social and economic well-being of people and communities everywhere. A study from 2018, for example, showed that 71 of the top 100 revenue generators globally were corporations while only 29 were countries. In other words, corporations – in many cases U.S. corporations – often operate on a level or higher economic footing than some of the largest governments in the world. That is a dynamic worthy of reflection – and one that drives home the weighty consequences and obligations associated with some corporate decisions.

Small wonder, then, that not just investors, but employees, consumers, vendors, suppliers, and numerous other stakeholders, look to companies to design and implement long-term, sustainable policies that support growth and address the environmental and social impacts these companies have. And these expectations increasingly play out in ways that were far less a part of the corporate consciousness just a decade or two ago. Today, what your business does and says is as likely to be dissected on Twitter and TikTok as it is to be reported in the Wall Street Journal or over a newswire. Consequently, consumers, employees, both current and potential, and a host of others can affect how companies are perceived and how well they succeed.

I know many in this virtual room, including those on boards of directors, understand this dynamic. And understand that these environmental and social issues, once perhaps treated as more peripheral, are now central business considerations. So boards are stepping up their engagement on climate and ESG related-risks and opportunities. For instance, in one recent survey, nearly 80 percent of directors reported that their boards are focused on some aspect of ESG. An analysis of a selection of S&P 100 proxy statements found that 78 percent of companies had at least one board committee charged with overseeing environmental sustainability matters. And 42 percent of companies reviewed in that analysis associated at least one director with expertise in environmental policy, sustainability, corporate responsibility, or ESG. At the same time, while many companies report that they oversee ESG at the board level, some analysis suggests they may lack specific sustainability mandates and do not demonstrate board-management engagement on ESG. In addition, there are some indicators that reported board expertise on ESG may be ill-defined and still lacking. There is more work to be done.

Because, in the words of prominent corporate attorney Marty Lipton, “a corporation ignores environmental and social challenges at its own peril.”

Continued

The Climate Culture Shock Is Coming

Wed, 30 Jun 2021 14:17:18 GMT

By Nathaniel Bullard

This article was originally published here

In the corporate world, big change starts at the top—which means companies will have to shake up their leadership to fulfill their environmental agendas.

My newsfeed—and probably your newsfeed too—is chockablock with stories about professional workers returning to their offices this summer. What the pandemic’s grand, unwitting experiment has shown is that the structure of work isn’t just habit, it’s culture.

Work culture varies not just industry to industry, but also company to company, and sometimes even worker to worker. Citigroup Inc. and Goldman Sachs Group Inc., for instance, have their global headquarters a few blocks from each other in Manhattan but are miles apart on their workplace policies—hybrid and report-to-your desk, respectively. Meanwhile, younger professionals are anxious about missing out on skills-development and relationship-building , while working parents—having experienced flexibility of time and location—may be less eager to re-engage with their pre-pandemic commutes and intricate schedules.

Just as the work-from-home shock of Covid-19 is forcing companies to reckon with company culture, so too are they increasingly reckoning with how they’ll address climate change. The pandemic could have set climate back on the agenda, but instead, 2020 set records for clean energy deployment, electric vehicle sales, corporate net-zero commitments, and sustainable finance . The global climate is certainly not antifragile , but apparently the business world’s commitments to improve it were.

That said, I think companies are in many ways quite far from being able to engage with the impact their businesses have on the climate—and the impact the climate has on their businesses. Earlier this year, my colleague Tim Quinson highlighted research from Tensie Whelan, a professor at New York University’s Stern School of Business, on how few corporate board members have a background in environmental, social, and/or governance subjects. I read Whelan’s paper again this week specifically for environmental expertise, and the data are pretty grim .

Continued

It’s our Big Moment – Environmental Law’s Chance to Shine as the “E” in ESG

Wed, 30 Jun 2021 13:22:29 GMT

By Heidi B. (Goldstein) Friedman

This article was originally published here

Picture the marquee surrounded by bright flashing lights as the Environmental, Social, and Governance (“ESG”) mandates, requirements and best practices are about to take center stage. While the “S” and “G” are critical for overall performance, I would argue that the “E” is the star of the show, and it will determine the quality of the reviews. As environmental lawyers, this is our opportunity to work together to assist with driving ESG change so all organizations can maximize their ESG performance and partner with the relevant agencies (national, state and local) to make an impact toward a sustainable future. While the ESG show was launched by investors, all stakeholders are demanding progress in this space. It is no longer an option to merely provide lip service to environmental advancements as board members; customers, workers and communities also require action. As public companies await the SEC’s regulation dictating what the “G” will mean, private companies and non-profits are also following suit as their stakeholders are confirming that these mandates will transcend the public company forum.

Our role here is not just a legal one, but rather as a strategic, trusted advisor and a reality check as the ESG goals and objectives are defined. It is a clear opportunity for the “Es” to spend a lot more time with the “S” and the “G” folks. Environmental counsel must be strategic and look at holistic risk and opportunity rather than just interpret existing regulations relating to the Clean Air Act or RCRA. Now that the “E” has a seat at the table, it is time to look at everything from organizations’ materiality assessment to the level of transparency in its public facing disclosures. On the back end, providing input into what is material to the organization is essential, not only because certain regulations may apply, but also because it allows counsel to identify issues that may become material in the future. Do not be fooled that ESG is all new – it is not. Instead, it is evolving with the same foundation of environmental counsel we have all been working on for years. We will see new laws and regulations emerge, but we already have the skill set to understand the connection between these environmental goals, social issues and external communications and compliance.

It is time for us to start asking some questions that can help drive change in a more direct and sustainable manner. Are the identified environmental objectives reasonable and achievable? What metrics are being used to track advancement toward these goals? One of my favorite quotes is, “If you do not track it, you do not treasure it.” It’s our job to support an assessment of these challenging questions while requiring data collection and compliance change. It is easy, for example, to set goals for net zero emissions by certain dates, but are those emission reductions related to products or factories or both? Have energy efficiency audits been considered? What is the status of evaluating the full life cycle of all products from cradle to grave with an increased focus on recyclable materials? As new facilities are built or lines expanded, is the GHG emission and climate change impact considered up-front? How about as new products are developed in the R&D stage? Then, there is the intersection with environmental justice, where agencies and companies can partner to make sure that community stakeholders are prioritized and, most importantly, communication with these stakeholders becomes proactive so that communities can be a partner to these goals rather than having to challenge them.

These are tough questions that demand even tougher answers, but our decades of experience as environmental counsel provide the necessary resources to make sure the answers are formulated with an eye toward mitigating overall risk and achieving reasonable milestones. This is not going to be a short running show either. ESG will be center stage for many years, with more regulations and requirements coming our way to interpret and support. So, your big moment is here, my fellow environment lawyers, and the curtain is rising. We’re excited to see everyone shine!

Continued

Climate change: Courts set for rise in compensation cases

Tue, 29 Jun 2021 14:18:28 GMT

By Matt McGrath

This article was originally published here

There's likely to be a significant increase in the number of lawsuits brought against fossil fuel companies in the coming years, say researchers.

Their new study finds that to date, lawyers have failed to use the most up-to-date scientific evidence on the cause of rising temperatures.

As a result, there have been few successful claims for compensation.

That could change, say the authors, as evidence linking specific weather events to carbon emissions increases.

So far, around 1,500 climate-related lawsuits have been brought before the courts around the world.

There have been some notable successes for environmental groups, such as in a recent case against Shell decided by a civil court in the Netherlands.

The judge ruled that, by 2030, the company must cut its CO2 emissions by 45% compared to 2019 levels.

The verdict also indicated that the Shell group is responsible for its own CO2 emissions and those of its suppliers.

However, there have been few successes in cases where the plaintiffs have sought compensation for damages caused by climate change linked to human activity.

Continued

Vicente Sederberg Launches ESG Practice

Tue, 29 Jun 2021 13:13:23 GMT

This article was originally published here

Vicente Sederberg Launches ESG Practice, Aims to Help Marijuana and Hemp Industries Lead on Sustainability, Social Responsibility, and Diversity

DENVER — Vicente Sederberg LLP (VS), a leading national cannabis law firm, announced Tuesday it has formed an environmental, social, and governance (ESG) practice aimed at helping the burgeoning marijuana and hemp industries become leaders in sustainability, corporate social responsibility (CSR), and diversity, equity, and inclusion (DEI).

Capturing ESG metrics is emerging as a business priority across all sectors, as investors, employees, government officials, and consumers increasingly focus on how companies manage, measure, and report their social and environmental impacts. Countries across Europe already require reporting of non-financial ESG metrics in their disclosures of material risks to investors, and the Securities and Exchange Commission (SEC) appears poised to adopt similar regulatory requirements for U.S. companies.

“Social and environmental concerns often get pushed to the backburner, especially in a nascent and rapidly growing industry where many companies are still struggling to get a foothold,” said Marc Ross, counsel and head of impact and ESG at VS. “Because the cannabis industry is still in development and under the microscope of a wide range of stakeholders, businesses are under a lot of pressure to do better. By prioritizing ESG issues from the outset, the cannabis industry can get out in front on them.

“It is only a matter of time before all U.S. companies will need to begin disclosing their ESG impacts,” he said. “While other sectors get up to speed, the cannabis industry will already be positioned to lead the way.”

The VS Impact and ESG practice group offers cannabis businesses a wide variety of services to help them meet the rapidly increasing demand for responsible business practices and metrics, including:

General CSR and DEI operations consulting and ESG screening to identify and address gaps, risks, and opportunities
Sustainability consulting and environmental compliance
DEI policies and integration across supply chain, vendor, recruitment, and employment practices
Preparation of community engagement plans, Positive Impact Plans, and Social Impact Plans (SIP)
Development of strategic philanthropy plans, establishment of corporate nonprofit organizations and foundations, and establishment and certification of benefit corporations
Employee engagement surveying and planning

“Investors seeking opportunities in the cannabis industry are increasingly asking about companies’ ESG initiatives, programs, and progress,” said Kim Napoli, VS counsel and director of DEI. “Potential employees and customers, many of whom are millennials, also want to work with and support businesses that prioritize issues like sustainability, diversity, equity, and inclusion.

“It is critical that companies recognize and engage on the social, racial, and criminal justice issues that are historically and inextricably tied to cannabis,” she said. “This new legal industry must play an active role in repairing the damage that was caused by decades of prohibition policies and unfair enforcement, especially among communities of color. To ensure a bright future for cannabis, we must first address its dark past.”

Advocating for DEI and CSR in the Cannabis Industry

VS has advocated for cannabis social equity programs across the U.S. and provided free or reduced-cost legal services to qualified applicants who need help accessing and navigating them. It has also performed pro bono federal and state policy work on social equity issues and provided free legal support for cannabis-related record-sealing clinics. Last year, the firm partnered with Massachusetts Continuing Legal Education (MCLE) to create the Vicente Sederberg Economic Empowerment Scholarship Fund, which supports legal training for attorneys working to promote social and racial equity in the cannabis industry.

“VS has roots in the drug policy reform movement, and that activist spirit and commitment to advancing the public interest have been pillars of our firm for over a decade,” said VS founding partner Christian Sederberg. “We are proud to use our depth of knowledge and real-world experience to help companies integrate meaningful ESG practices in strategic and authentic ways. Our mission is to position not only cannabis businesses, but also their surrounding communities, for healthy, sustainable, and impactful growth.”

About the Impact and ESG Practice Leaders

The VS Impact and ESG practice is led by attorneys with deep experience in CSR, sustainability, and DEI, both within and outside the cannabis space.

Marc Ross , counsel and head of Impact and ESG at VS, previously served as director of community outreach at multistate cannabis operator Harvest Health and Recreation Inc. Prior to entering the cannabis space, he founded and led Rock the Earth, a national environmental advocacy organization. He also served as in-house environmental counsel to Alcoa Inc. and as an environmental litigator for Reed Smith LLP and the Pennsylvania Department of Environmental Protection. He is a member of the Denver Cannabis Sustainability Working Group and the national advisory board for Headcount’s Cannabis Voter Project. He also serves as CSR mentor to Canopy Boulder, a venture fund and business accelerator in the cannabis and hemp space.
Kim Napoli , counsel and director of diversity, equity, and inclusion at VS, is a member of the Massachusetts Cannabis Advisory Board and the Cannabis Trade Federation’s DEI Task Force. Prior to joining VS, she served as senior director of corporate social responsibility at multistate cannabis operator Parallel. She also served as a strategic advisor to the Cannabis Community Care and Research Network, director of diversity programs at New England Treatment Access, LLC, and director of outreach for the campaign in support of Question 4, which legalized and regulated cannabis for adult use in Massachusetts.
Christian Sederberg , founding partner of VS, is board chair of the U.S. Cannabis Council and the Cannabis Trade Federation, and he is a member of the CTF DEI Task Force. He also sits on the boards of the Black Cannabis Equity Initiative, the Burnes Center on Poverty and Homelessness, and Colorado Leads, as well as the advisory board for Headcount’s Cannabis Voter Project. He is recognized as one of the nation’s top cannabis lawyers by Chambers USA and The Best Lawyers in America; one of the 100 most influential cannabis leaders by Green Entrepreneur and Cannabis Business Executive; and a “Top Social Equity Cannabis Power Player” by Blizzy magazine.

Full Article

What Companies Should Know About Modern Slavery

Wed, 23 Jun 2021 13:40:28 GMT

By Karen H. Davis and Brittney R. Powell

This article was originally published here

Companies are increasingly focusing on the environmental, social and governance (ESG) aspects of their businesses. In 2019, 90% of the S&P 500 index companies published sustainability reports. In contrast, in 2011, only 20% of these companies published such a report. ^[1] Many companies have come to recognize that a strong ESG program is important to investors, customers and other stakeholders. In particular, companies that sell products into consumer markets and have significant brand recognition face growing expectations that their products and business operations will address ESG considerations. Promoting human rights and preventing human trafficking is an important component of an effective ESG program. Human trafficking does not require the relocation of people. Rather, human trafficking includes forced labor, child labor and slavery, as well as coercion, abduction, fraud and exploitation connected with labor and is sometimes referred to as modern slavery.

The U.S. State Department estimates that human traffickers are denying nearly 25 million people their fundamental right to freedom. ^[2] This is not an isolated problem. Slavery and human trafficking exist throughout the United States and globally. ^[3] Human trafficking cases have been reported in all 50 states and the District of Columbia. ^[4] The U.S. Department of Labor has identified 155 goods from 77 countries produced by child or forced labor. ^[5] Researchers found that 71% of companies believe there is a likelihood of modern slavery occurring at some point in their supply chains. ^[6] Apparel has been identified as one of the top five products imported into the United States at risk of having been made using forced labor, along with electronics, fish, timber and cocoa. ^[7]

Continued

ESG Regulation Is Coming. Are You Ready?‎

Mon, 21 Jun 2021 13:37:48 GMT

By Andrew D. Otis

This article was originally published here

In addition to the building momentum behind environmental, social and governance (“ESG”) ‎tracking and disclosure spurred on by climate policy, activist investors, and racial justice ‎concerns, legislators and regulators are beginning to consider whether to regulate ESG and ‎climate risk reporting. Well behind their European colleagues, these nascent regulatory ‎developments will likely first apply to public companies but could set standards that could be ‎applied to all companies. ‎

On June 16, the House of Representatives passed the Corporate Governance Improvement and ‎Investor Protection Act (the “Act”). A cluster of five measures designed to increase public ‎company disclosures, the Act would require public companies to disclose the link between ‎environmental, social and governance (“ESG”) metrics and their long term business strategy ‎and the process that the company uses to determine the impact of ESG metrics on their long-‎term business strategy. The Act would also create a new Sustainable Finance Advisory ‎Committee to the Securities and Exchange Commission (“SEC”) which would recommend ‎policy changes to facilitate capital flow toward environmentally sustainable investments. The ‎Act would also require public companies to assess physical and transition risks associated with ‎climate change and describe corporate governance structures and processes to identify, evaluate ‎and disclose such information to investors.‎

Passage of the Act as structured is unlikely but it is an indication of legislative interest in ‎regulating ESG. The Act passed the House by one vote with no Republican votes and four ‎Democrats voting against. Although the Act has active White House support, this partisan vote ‎in the House makes it highly unlikely that the Act in this form would garner the ten Republican ‎votes necessary for passage in the Senate.‎

Congress is not the only authority focused on ESG and climate disclosure regulation. The Act ‎passed the House on the day after the public comment period closed on a set of questions posed ‎by the SEC on expanding climate change disclosure. In December 2020, the ESG ‎Subcommittee of the SEC Asset Management Advisory Committee issued a preliminary ‎recommendation that the SEC adopt standards by which public companies would disclose ESG ‎risks. Commissioner Allison Herren Lee has reportedly stated that the SEC would propose ‎expanded climate disclosure requirements by the end of this year.‎

It appears likely that the SEC will issue rules regarding climate change disclosure and may ‎issue standards to track and report ESG risks. While this would directly impact only public ‎companies, it would set standards to which limited partners, lenders, insurers and institutional ‎investors could potentially hold all companies. ‎

Whether by stakeholder pressure, management interest or regulatory requirement, ESG is a ‎corporate reality that every company should be preparing to address now. Are you ready?‎

Implementing ESG is more than just writing a report or a policy, although those are key ‎components. Ultimately, effective ESG is a program that requires management commitment, ‎developing and tracking metrics and an effective management structure. Although all ESG ‎programs have similar fundamental components, programs can vary substantially by industry. ‎Locke Lord lawyers have worked with clients in the energy industry, insurance and other areas ‎to perform an array of ESG services, including policy development and implementation, Board ‎and management presentation, audits, transactional due diligence and crafting effective ‎disclosures.

Continued

How lawyers are cleaning up supply chains

Fri, 18 Jun 2021 17:06:00 GMT

By Patrick Temple-West

This article was originally published here

Amid greater scrutiny of supplier practices, general counsel are helping companies reach sustainability goals

Multinationals are digging deeper into the legal plumbing of their own organisations to maximise their sustainability credentials and meet climate or social pledges. As organisations reassess their supplier networks in order to fulfil environmental, social and governance (ESG) commitments, in-house lawyers can play an important role in helping to hit these targets by renegotiating supplier contracts and managing regulatory compliance.

“Supply chains have been pulled closer to the centre of corporate sustainability commitments,” says Daniel D’Ambrosio, a senior associate at law firm DLA Piper. That means the legal department needs to be involved in procurement and the reporting and disclosure process, to help further ESG aims, he explains.

Read the full article here

House passes ESG, climate disclosure rules for public companies

Fri, 18 Jun 2021 15:32:34 GMT

By Laura Weiss

This article was originally published here

The House passed legislation Wednesday that would require public companies to report environmental, social and governance metrics, betting that shareholders will use the information to pressure corporations on climate risk and other issues important to Democrats.

The measure’s passage, on a 215-214 vote, marked the first time the chamber has passed sweeping legislation for transparency on sustainability issues. The package of bills would require disclosure of ESG metrics broadly and dictate specific reporting expectations on climate risks, political spending, CEO pay and taxation rates.

The package “will create clear, consistent disclosure standards for issuers and finally provide investors and our markets with the information they need to make the best investment decisions possible and to hold the companies they’re invested in accountable,” House Financial Services Chairwoman Maxine Waters , D-Calif., said Monday during a Rules Committee meeting on the measure.

Passage by the House comes as the Securities and Exchange Commission, which oversees corporate financial disclosures, says it is weighing transparency rules on climate risk, board diversity and workforce matters.

While the White House and congressional Democrats largely back ESG disclosure mandates and see the issue as aiding their goals, the effort faces opposition from Republicans and industry, who say it’s premature and too costly.

The package from California Rep. Juan C. Vargas combines ESG proposals Democrats have put forward for years. Vargas first introduced the package’s primary bill in 2019, and other measures have been promoted by Democrats who won seats for the first time during the 2018 midterm elections.

The legislation would require publicly traded companies to disclose and define ESG metrics and their view on the link between ESG and long-term business performance. It would allow the SEC to consider independent, internationally recognized disclosure standards for reporting when creating rules to facilitate the ESG disclosure and establish a Sustainable Finance Advisory Committee at the agency.

The package would also require public companies to disclose industry-tailored climate information, including direct and indirect greenhouse gas emissions and fossil fuel-related assets.

Other provisions would mandate quarterly and annual reporting on political activities by companies and their trade associations, including the amount, date, candidate and party for contributions. Companies would have to report a ratio of the percentage pay increase for executives compared to the raise for a median worker each year, and taxes paid by jurisdiction.

Before passage, the House adopted amendments that would require disclosure of the race, ethnicity, gender, sexual orientation and veteran status of board members and executives; workforce-related information, including diversity, safety and pay; settlements or judgments connected to workplace harassment; board members’ cybersecurity expertise; and sourcing of materials from Xinjiang, China.

Continued...

The supply chain act is coming!

Fri, 18 Jun 2021 14:10:12 GMT

By Stefan Lohn

This article was originally published here

On 11 June 2021, the German parliament passed the Act on Corporate Due Diligence in Supply Chains – in short: Supply Chain Act. It will enter into force on 1 January 2023 and establishes extensive due diligence and reporting obligations regarding human, worker's and environmental rights in the supply chain for companies based or operating in Germany.

In globalised trade, value and supply chains take place in the entire world. The procurement markets for intermediate goods or finished products at all stages of production are often located in developing and emerging countries. In these states, standards for social, fair and sustainable economic activities are often less pronounced than in developed industrial nations.

Environmental, Social and Corporate Governance (‘ESG’) criteria such as labour protection, the fight against exploitation and child labour, or compliance with environmental standards increasingly are in the focus of public attention. After long political discussions, the German parliament on 11 June 2021 passed the Act on Corporate Due Diligence in Supply Chains (the "Supply Chain Act").

Particularly the scope of due diligence obligations and their extension to foreign companies operating in Germany as well as the issue of civil law liability in case of non-compliance were subject to controversial discussion.

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PwC planning to hire 100,000 over five years in major ESG push

Tue, 15 Jun 2021 14:06:58 GMT

By Jessica Dinapoli

This article was originally published here

Accounting firm PwC said on Tuesday it would invest $12 billion over five years to create 100,000 new jobs aimed at helping its clients grapple with climate and diversity reporting and also in artificial intelligence, as part of its new global strategy.

The new hires will come from mergers and acquisitions PwC completes and direct hires from competitors, Global Chairman Bob Moritz said in an interview. Of the 100,000 people PwC will hire, about 25,000 to 30,000 will be in the United States, and 10,000 of those will be from Black and LatinX communities, Moritz said.

At present, the firm employs about 284,000 people globally.

Moritz said PwC had approached ESG more "narrowly" before, focusing on reporting frameworks.

"Now every employee of PwC has to be familiar with the issues," he said, adding that ESG will be embedded in the firm's work.

Companies and investors are more frequently examining their impact on the environment and scrutinizing diversity within their ranks, initiatives that extend beyond the traditional financial accounting and auditing services that PwC has long provided.

Some asset managers weigh investment decisions based on environmental, social and governance (ESG) factors alone.

U.S. companies are also now gearing up for potential regulatory oversight of their environmental disclosures, board diversity and workforce.

PwC is increasing training for partners and staff in ESG in areas such as climate risk and supply chains and creating an ESG academy.

PwC will also set up new leadership institutes that help executives, boards of directors and C-Suites create diverse workforces and manage in uncertain times.

In addition to its focus on ESG, PwC is allocating $3 billion to invest in its Asia-Pacific region, aiming to double its business there. The region makes up about 18% of the firm's revenue currently, Moritz said.

The firm is also setting aside $1 billion to further automate parts of its auditing process.

G7 Highlights for ESG Investors and Business Include Climate Finance, Sustainable Supply Chains, Energy Transition

Mon, 14 Jun 2021 13:09:35 GMT

By Mark Segal

This article was originally published here

Over the weekend, leaders of leading industrial nations met at the UK-hosted G7 summit, with a broad agenda ranging from COVID vaccination efforts to post-pandemic recovery and climate action. We highlight below some of the key points for ESG-focused investors and businesses. While the G7 leader’s shared agenda statement dealt primarily with high level issues, as expected, they will be relevant in outlining the policy actions likely to come out of the countries in the coming months, particularly ahead of the upcoming UN Climate Summit, COP26 in November.

While COVID vaccination and economic recovery took center stage at the summit, initiatives to mobilize finance towards tackling climate issues, and efforts to ramp up decarbonization of emission-intensive industries were also given significant attention. Notably, this was the first G7 meeting in which all participating countries have committed to achieve net zero emissions by 2050.

Sustainable finance and disclosure

On the sustainable finance front, with a goal to jointly mobilize $100 billion annually through 2025, the G7 leaders committed to increase their international public climate finance contributions. The leaders also backed private sector climate-focused initiatives to develop a green finance market, such as the recently launched Glasgow Finance Alliance for Net Zero (GFANZ) , bringing together several net zero-focused financial industry alliances, including the Net Zero Asset Managers Initiative, the Net-Zero Asset Owner Alliance, and the Net Zero Banking Alliance, representing more than 160 firms, responsible for assets of over $70 trillion, as well as the Taskforce on Nature-related Financial Disclosures (TNFD) , noting the potential of these initiatives to mobilize trillions of dollars towards achieving global net zero goals.

Following up on a statement from last week’s G7 meeting of Finance Ministers and Central Bank Governors, the G7 leaders also expressed their support for movement towards mandatory climate reporting, based on the Task Force on Climate-related Financial Disclosures (TCFD) framework.

Industrial climate action

Stressing a need to address the climate impact of emissions-intensive industries, the G7 leaders highlighted initiatives and actions directed towards several specific sectors. Concerning the energy industry, the leaders committed to focus efforts on increasing energy efficiency, accelerating renewable and other zero emissions energy deployment, and reducing wasteful consumption, while pledging to largely decarbonize their domestic power systems over the next several years. Additionally, the statement stated that the countries will phase out new direct government support for international carbon-intensive fossil fuel energy as soon as possible, with limited exceptions consistent with an ambitious climate neutrality pathway.

Transport sector commitments include accelerating the transition away from gas and diesel-powered vehicles, and to scaling up zero emission vehicle technologies, including buses, trains, shipping and aviation. For industrial sectors, the statement highlighted efforts to act on hard-to-decarbonize sectors such as iron and steel, cement, chemicals, and petrochemicals, with a focus on accelerating progress on electrification and batteries, hydrogen, carbon capture, usage and storage, zero emission aviation and shipping. Significantly, nuclear power was included in the list of decarbonizing technologies, “for those countries that opt to use it.”

The G7 statement also outlined climate-related actions for industries including homes and buildings, such as the promotion of sustainable heating and cooling systems, and agriculture, forestry and other land-use sectors, with policies encouraging sustainable production, the protection, conservation, and regeneration of ecosystems, and the sequestration of carbon.

Forced labor in supply chains

One of the key focus areas of the G7 statement was the issue of forced labor in supply chains. The G7 leaders committed to work collectively, domestically, and with multilateral institutions to protect individuals from forced labour and to ensure that global supply chains are free from the use of forced labour, specifically highlighting state-sponsored forced labor of vulnerable groups and minorities, in the agricultural, solar and garment industries. A U.S. White House statement specifically pointed to “the main supply chains of concern in Xinjiang.”

Click here for the full G7 Summit statement.

Climate Change, ESG, and Materiality

Fri, 11 Jun 2021 13:04:52 GMT

By Thomas Gorman

This article was originally published here

Climate change and ESG are topics that have been repeatedly addressed by regulators around the world. The Securities and Futures Commission of Hong Kong and the Monetary Authority of Singapore, for example, have repeatedly addressed the topics. Likewise, various members of the SEC have discussed the questions in public remarks. And, while serving as Acting Chair, Commissioner Allison Herren Lee directed the staff to work on the issues.

There is also no doubt that many U.S. public companies evaluate the issues as they formulate strategy and guide their enterprises into the future. Yet the Commission’s disclosure standards in the area are over a decade old. Much has happened since then; but little has changed in the area for the Commission.

Recently, Commissioner Allison Herren Lee weighed in again, discussing four key myths about climate change in remarks delivered at the 2021 ESG Disclosure Priorities Event on May 24, 2021 . Myth 1 is that “ESG matters . . . material to investors are already required to be disclosure . . .” Incorrect. Materiality standing alone does not impose a disclosure obligation. To the contrary, absent a specific duty to disclose, materiality does not require disclosure as the Supreme Court has repeatedly held in cases such as Basic v. Levinson, 485 U.S. 224 (1988).

Myth 2, is a bit trickier, according to the Commissioner. This myth states that “where there is a duty to disclose climate and ESG matters, we can rest assured that such disclosures are being made.” Incorrect. Materiality is an objective, reasonable investor standard, the Commissioner notes. Nevertheless, materiality is all too often in the eye of the beholder. What one person sees as material another does not. Enforcement cases brought by the agency chronical numerous examples where matters that one group may view as “material” under the objective reasonable investor standard, another does not. Accordingly, even if there are disclosure obligations under the federal securities laws, that does not necessarily mean that business enterprises are making the disclosures.

The third myth is that “SEC disclosure requirements must be strictly limited to material information.” Incorrect again. While it is true that the antifraud provisions such as Exchange Act Section 10(b) and Securities Act Section 17(a) are grounded on materiality, others are not. For example, the Commission’s rule writing authority under Securities Act Section 7 does not have a materiality requirement. The same thing can be said about Exchange Act Sections 12,13 and 15. Likewise, Regulation S-K frequently requires disclosures without citing a materiality standard.

The final myth states that “climate and ESG are matters of social or ‘political’ concern, and not material to investment or voting decisions.” Incorrect. The issues here are tied to science, and while they may have some social or political implications, that does not translate them into matters that are not material to investors. As the Commissioner notes, the ultimate decision on materiality rests with investors. There is no doubt that many view the questions as important and critical. In the end, the debate on climate and ESG should not be guided by incorrect myths.

Comment

No doubt the Commissioner is correct that the debate over climate and ESG should not be mired in false myths. Nor should it be lost under labels like “political” or “social.” The questions are far too important for such an approach. One need only look to the actions of other regulators around the world who are discussing the issues and implementing appropriate standards to grasp the point.

The question for the Commission in the first instance, however, should not hinge on selecting which standards or program or other construct to adopt. The question is how are public enterprises using shareholder money in the areas of climate change and ESG? How do corporate executives deploy the resources of the company in these areas? Or do those managers refuse to allocate any resources on the question of climate change and ESG?

Each of these questions, and a host of others, are being addressed by issuers that are deploying shareholder resources on the issues. Shareholders are entitled to know how the resources of the enterprise are being used – those resources, after all, are being paid for with shareholder money. The MD&A, for example, is a section which is supposed to put the shareholder in the seat of the CEO and show that shareholder how the enterprise is being shepherded today, tomorrow and the day after that with the shareholders’ money. Whatever one believes materiality means, there is no doubt that it requires shareholders be told how their money is being spent.

Increase in clients’ ESG transparency is driving law firms to create new sustainability practice areas

Thu, 10 Jun 2021 14:42:22 GMT

By Natalie Runyon

This article was originally published here

We spoke to ESG professionals at two law firms to see how they're handling the increasing demand from clients and investors to address these concerns.

In late April, about one-quarter of European investment funds classified themselves as “sustainable” as investors’ demand for adherence to environmental, social, and corporate governance (ESG) concerns soars . Although demand for ESG-compliant investment products is surging, confusion over what it means in practice has spurred European policymakers to define standards and terms for transparency.

The spillover effect of this demand is impacting law firms too. According to Thomson Reuters data, 42% of its Large Law clients have ESG practices, including Freshfields and Herbert Smith Freehills (HSF). We sat down with leaders of these two firms’ ESG practices to discuss the current realities of advising clients in an emerging area of law that remains complex.

Timothy A. Wilkins , Freshfields’ global partner for client sustainability, and Oliver Dudok van Heel , who also manages the firm’s strategy to reduce the firm’s environmental footprint, work together to advise the firm’s clients on ESG issues.

HSF also works multilaterally, and Silke Goldberg , partner and chair of the firm’s global ESG practice advises clients on clean energy projects and on issues pertaining to projects around carbon credits, trading, permit and capture, as well as sustainability disclosures and development of a sustainability strategy. HSF’s pillars of its ESG practice are around “climate change, business and human rights, responsible investment, green/sustainable finance, and good governance,” says Goldberg, who is also one of multiple leaders working internally on ESG.

Continued

Coca-Cola Sued For Deceptive Sustainability Claims

Thu, 10 Jun 2021 13:07:43 GMT

By Megan Baroni

This article was originally published here

Last week, Coca-Cola was sued by Earth Island Institute for deceptive marketing regarding its sustainability efforts “despite being one of the largest contributors to plastic pollution in the world.”

In the Complaint, Earth Island Institute, a not-for-profit environmental organization, alleges that Coca-Cola is deceiving the public by marketing itself as sustainable and environmentally friendly while “polluting more than any other beverage company and actively working to prevent effective recycling measures in the U.S.” Coca-Cola has developed a number of initiatives to advertise its commitment to plastic waste reduction and recycling, in part through its “Every Bottle Back” and a “World Without Waste” campaigns. It touts its goal to collect and recycle one bottle or can for each one it sells by 2030. Coke also claims that its plastic bottles and caps are designed to be 100% recyclable. The Complaint presents a number of examples of these allegedly misleading statements across a range of mediums, including on its website, in advertising, on social media, and in other corporate reports and statements.

Meanwhile, according to the Complaint, Coca-Cola is the world’s leading plastic waste producer, generating 2.9 million tons of plastic waste per year. It uses about 200,000 plastic bottles per minute, amounting to about one-fifth of the world’s polyethylene terephthalate (PET) bottle output. This plastic production also relies on fossil fuels, resulting in significant CO2 emissions.

This waste generation is complicated by significant deficiencies in recycling. Despite the public’s common understanding that plastic bottles can be recycled, only about 30 percent of them actually are. According to the Complaint, the plastics industry has long understood this problem, but it has sought to convince the consumer that recycling is viable and results in waste reduction. The Complaint even quotes former president of the Plastics Industry Association as saying, “If the public thinks that recycling is working, then they are not going to be as concerned about the environment.”

The Complaint alleges that not only has Coca-Cola failed to implement an effective recycling strategy, it has actively opposed legislation that would improve recycling rates. According to the Complaint, Coke has actively fought against “bottle bills”—laws that would impose a small fee on plastic bottle purchase that would be returned to the consumer when that bottle is returned to a recycling facility. Jurisdictions with these laws tend to have better recycling rates, albeit at a small additional cost to the consumer at the point of purchase.

The Complaint does not allege that Coke has violated any environmental laws. Instead, Earth Island Institute seeks to hold Coke accountable under the Washington, D.C. Consumer Protection Procedures Act. The Complaint alleges that Coca-Cola’s misrepresentations mislead consumers, and that Coke’s products “lack the characteristics, benefits, standards, qualities, or grades” that are stated and implied in its marketing materials. Earth Island Institute does not seek damages; it only seeks to stop Coca-Cola from continuing to make these statements.

This case is the latest example of ESG—Environmental, Social, and Governance—factors playing out in practice.

Report finds ESG impacting debt raising for UK corporates

Tue, 08 Jun 2021 16:38:03 GMT

By Victoria Basham

This article was originally published here

Corporate treasurers increasingly factor in ESG when deciding debt funding strategy, with sustainable loans and green bonds most popular options

A new report from Herbert Smith Freehills and the Association of Corporate Treasurers suggests that ESG has rapidly reasserted itself at the top of the corporate treasury agenda after a pandemic-induced slip and has impacted corporate debt raising.

The Corporate Debt and Treasury Report was based on a survey of finance and treasury professionals of 100 primarily FTSE 250 and FTSE 100 corporates.

It found that while somewhat suppressed during the early stages of the pandemic, the focus on ESG and sustainability-linked finance has quickly risen again to be a priority for the corporate treasury. A number of respondents suggested that this was becoming business-as-usual, with ESG reporting contained within plc audited financial statements rather than being bespoke, for example.

Herbert Smith Freehills finance partner Kristen Roberts said: “ The key driver is not pricing; it is fundamentally a response by company boards to these issues as raised by their customers, investors and other stakeholders; it’s a key part of corporate strategy.”

His sentiments were echoed by a contributor to the report, who said: “The benefit is really investor relations, not pricing”, with another saying it is a “reputational issue” to ignore ESG now.

Many agreed that there were reputational issues in committing to ESG/sustainability targets, but also felt there was a wider anti-embarrassment issue if a business didn’t incorporate an element of ESG/sustainable financings in their debt capital structure, considering the strong growth of this trend.

The report charts the increasing importance of ESG when organisations decide their debt strategy, with the percentage of respondents agreeing that ESG is a factor rising from 17 in 2018 to 61 this year. The percentage of those intending to include ESG features in their next financing has also increased, from 50 last year to 65 this year; sustainable loans are the most likely source of ESG financing at 35 percent, followed by green bonds (17 percent) and sustainable bonds (15 percent).

Roberts commented that the flexibility of sustainability-linked loans “offer the most straight-forward route for corporates to dip their toes into ESG debt financing. Over the longer term there is a sense that green loans and bonds could see much broader application as corporates pursue specific aspects of their ESG agendas via green-lending.” He added that compared to 2020 “the impediments to incorporating ESG elements into financings are weakening. This should be the case as the markets continue to develop and refine ESG financings and they become better understood.”

Just over half of respondents plan to refinance their debt this year (up from 40 percent in 2020), partly as a result of pent-up demand from of the pandemic. Just under 40 percent also intend to raise new capital – an increase from 30 percent 12 months ago, with the report suggesting their confidence may be related to most claiming that they aren’t experiencing more cautious behaviour from customers, suppliers or creditors.

Asked how they expect their organisation’s expenditure will compare to 2020, one third suggested increased spending on acquisitions, up from 25 percent in last year. A quarter also indicated that increased capital will be used to pay dividends, up slightly from 22 percent in 2020.

Is ESG the opportunity GCs have been waiting for?

Tue, 08 Jun 2021 16:37:05 GMT

By Timothy Wilkins

This article was originally published here

With global ESG assets at more than $30tn and expected to grow further, ESG will help define the future for business and society. General Counsel (GCs) have a powerful opportunity to steer businesses towards sustainability and Timothy Wilkins, Global Partner for Client Sustainability, recently led a discussion to investigate how lawyers will play a central role. He was joined by Kirin Kalsi, Head of Legal UK for E-ON; Keith Carr, General Counsel at Lafarge Holcim; and Chris Allen, General Counsel for Corporate, Commercial and Institutional Banking and General Counsel for Europe and America at Standard Chartered Bank.

Kicking off the webinar, Wilkins noted that sustainability and the economic, social and governance aspects of ESG have all now moved into the core of board strategy and C-suite decision-making. “In the transaction space lawyers face issues around the acquisitions of renewable assets and disposals of high carbon producing ones. On the litigation side – we certainly are looking at risks of the potential harms of climate change but also a growing amount litigation related to appropriate disclosure of sustainability activities. And then, of course, lawyers must assess an entire web of fast-moving regulatory changes.”

Companies and countries alike are considering carefully where to deploy resources to build back in a greener and more sustainable way after the pandemic, Wilkins added. “All these issues land squarely in the lap of our GC panelists.”

Sustainability-related risk management

The shift to ‘purpose-driven’ companies is central to the sustainability debate. But, Tim asked, how does that fit into the risk management and hard law management responsibilities of a GC?

Lafarge Holcim’s Keith Carr said that making a purposeful contribution is important. “A company now not only has to be operationally successful, it has to have the right moral compass and company ethos in everything it does.”

Considerations include health and safety, labour practices, environmental compliance, governance and more. Given this long list, Carr said GCs must go beyond ‘traditional law’ to grapple with the implications of emissions trading, NGO charters, human rights practices, sustainability metrics and UN reports, among others. “We have to adapt from what and how we learned in law school.”

Legal and compliance teams must also understand that compliance with the law is no longer good enough, Carr argued. GCs must look at the wider issues, understanding all of the possible consequences of an action.

Contributing to sustainability as a GC

With many companies now having internal sustainability teams and chief sustainability officers, Wilkins asked how a GC can best contribute to an organisation’s sustainability transition.

E-ON’s Kirin Kalsi advised to approach people directly and be proactive. “You’ll likely find an open door if you push,” she said, noting that many organisations already do a lot in sustainability –related to legal requirements like sanctions, modern slavery, environmental impact reporting – but may not report on these actions or measure them.

Becoming sustainable can be made more manageable by finding simpler short-term improvements, as well as working towards long-term goals, Kalsi said. “Speak to your supply chain colleagues. Likely you can put in some fairly straightforward additional clauses into your standard procurement contract. That’s a really easy quick win.”

She also suggested a collaborative, multidisciplinary approach. “Don’t try and do this all on your own. Talk to colleagues across the group and in other jurisdictions, and peers in other organisations.”

ESG integrated into business strategy

Standard Chartered Bank’s Chris Allen underlined the all-encompassing nature of ESG across business strategy. “ESG is not a standalone, siloed series of activities that are somehow separate from the rest of the strategy of the organisation – it’s deeply embedded.”

At the strategic level, he said, an organisation’s decisions on the future direction of a business are intertwined with ESG. “GCs are ideally part and parcel of that conversation.”

GCs also have an important role to play in risk and governance, Allen added. “The lexicon that sits around this topic is still a moving target from a legal and regulatory point of view. Embedded within that is a lot of potential reputational downside risk if you get that wrong.”

Sustainability-related regulatory frameworks increasingly sit around transactions, with evolving taxonomies. “Critically, we’ve seen changes within the last couple of years in the regulatory capital of sustainable versus non-sustainable-linked financing, and that is significant, particularly in the realms of project finance, where it actually goes to a dollars and cents discussion – it’s not just about reputational risk.”

Widening out to the international, cross-border transactional environment means “huge amount of fragmentation and complexity”, Allen said.

The discussion, concluded with further questions on the potential risk of ‘greenwashing’, how GCs are dealing with issues around the pandemic, such as mental health, and the financing of sustainably-aligned strategies.

UK Government Proposals for Greater Board Accountability Under New ESG Whitepaper

Tue, 08 Jun 2021 16:35:49 GMT

By Baker Botts

This article was originally published here

Against the backdrop of establishing the UK as a world class destination for investment and innovation post-Brexit, the UK Government has published a new whitepaper entitled 'Restoring trust in audit and corporate governance' seeking consultation on its various proposed reforms: https://www.gov.uk/government/publications/restoring-trust-in-audit-and-corporate-governance (the "Whitepaper").

The Whitepaper aims not only to learn from several recent high-profile collapses of British businesses, but also to firmly promote the UK Government's ESG strategy, including:

E (Environmental): inclusion of climate change risks, carbon emission disclosures and sustainability measures in the new corporate reporting regime (beyond the scope of this paper)

S (Social): new powers of regulator leading to increased board accountability and enhanced protection for employees and customers, and greater focus on public interest

G (Governance): more comprehensive corporate reporting regime, including wider scope of applicability and higher levels of board accountability for internal controls of the company

The current UK corporate governance regime

Directors of all UK companies (however large or small) are subject to the general directors' duties regime under the Companies Act 2006 (including promoting the success of the company, avoiding conflicts of interest, and acting with reasonable care, skill and diligence), in addition to common law duties and other duties relating to company reporting, recordkeeping, and auditing.

The boards of London-listed companies are further subject to a higher test of corporate governance under the UK Corporate Governance Code (the "Code"), requiring relevant companies to comply with its provisions or explain any digression. The level of expected compliance with the Code varies depending on the type of listing. Many companies who do not fall under the mandatory regime of the Code comply in any case, to demonstrate best practice to shareholders, stakeholders, and the public at large. The Code sets out standards of best practice in relation to matters such as corporate governance, board leadership and effectiveness, remuneration and accountability, and includes guidance for board members in relation to managing risk, the company's internal controls, company reporting and, for board members of certain financial institutions, solvency and liquidity risk management.

Expanding the scope of the UK corporate governance regime

The Whitepaper seeks to extend the scope of applicability of the UK corporate governance regime, both as regards substance and the companies which are caught thereunder. As regards the latter, the Whitepaper focuses on expanding the definition of public interest entities ("PIEs"). PIEs currently comprise:

(i) listed entities whose transferable securities are admitted to trading on a regulated market (for example, the Main Market of the London Stock Exchange);

(ii) credit institutions;

(iii) insurance undertakings; and

(iv) any entity designated as a PIE by an EU Member State (the UK has, prior to this point, not designated additional entities as such).

The Whitepaper proffers two options for expanding the definition of PIEs – it is important to note that both of which would seek to cover the largest private companies as PIEs:

Option 1: all companies (listed or not) having:

more than 2,000 employees; or
greater than £200 million turnover and a balance sheet of more than £2 billion

Option 2: all companies (listed or not) having both:

more than 500 employees; and
greater than £500 million turnover

The rationale behind including the largest private companies (and those relevant publicly listed companies not already subject to the mandatory Code regime, such as those entities listed on smaller markets such as AIM) is recognition of the vast economic and social impact they have in the UK, and the widespread implications on society should they fail.

Proposals to increase director accountability and introduce clawback arrangements to director remuneration

In the wake of several high-profile UK business failures, the Whitepaper covers proposals aimed at targeting board member's accountability for internal controls, dividends and capital maintenance, and toughening malus and clawback arrangements to provide better reassurance against rewards for failure.

In the event of a collapse of a business, whilst the general principle is that of collective responsibility of the board, as a whole (as emphasised in the Code and enshrined in relation to various acts and responsibilities set out in the Companies Act 2006), it may ultimately be determined that a director having specialist expertise (i.e. a qualified accountant) would be held to a higher level of accountability in relation to the finance of the company. The Whitepaper considers the idea of requiring board members of PIEs holding key financial and reporting roles (CEO, CFO, Chair and Chair of Audit Committee) to have fulfilled certain criteria before appointment to office, but concerns have been raised that this could undermine the collective responsibility of the board.

The Whitepaper outlines the UK Government's intention to replace the Financial Reporting Council (the "FRC") with a new regulator who will have new powers of enforcement in relation to breaches by PIE directors (taking into account the enlarged scope of this definition under new plans) of the existing statutory duties, including the duties to:

maintain adequate accounting records;
only approve accounts if the board is satisfied that they give a true and fair view; and
approve and sign the annual accounts (including approval of ancillary reports and statements relating to the audit).

As the position currently stands, the FRC has no direct powers to intervene in the event of a breach. The Whitepaper outlines the UK Government's plans to give the new regulator investigation and enforcement powers to hold company directors of PIEs to account. It is further recommended that new provisions be added to the Code such as the inclusion of certain minimum clawback conditions or "trigger points" in directors' remuneration arrangements to apply for at least two years after any such award is made in the event of serious director failings, including:

(i) material misstatement of results or performance calculations;

(ii) material failure of risk management and internal controls;

(iii) misconduct, or conduct leading to financial loss;

(iv) reputational damage; and

(v) unreasonable failure to protect the interests of employees and customers.

The UK Government is keen to also encourage companies to add to these minimum conditions to encapsulate circumstances which are relevant to the business / industry in which the company operates.

In addition to the new powers of enforcement, the UK Government would like to see the new regulator granted investigative powers to gather information and launch enquiries to establish whether a board member has breached a relevant requirement. In the event that a breach is found to have occurred, the intention is that the new regulator would have the authority to impose civil sanctions.

Key takeaways

An overhaul of the UK corporate governance regime was inevitable, and its implementation comes in the aftermath of the failure of several huge British businesses. The UK Government is keen to promote the UK as being open for business, investment and innovation, and its stance on corporate transparency and good governance has always been world leading. UK rules are considered strict enough to ensure adherence to the highest standards, without stifling creativity or the freedom of companies to operate as they desire (within the bounds of UK company law) – this balance must be carefully protected with the implementation of new rules.

Greater board accountability and proposed clawback provisions in the event of serious director failings should be welcomed, as it is a positive step towards affording greater protection to all stakeholders in a business (including employees, customers, and other companies engaged in that business). Giving directors greater 'skin in the game' is a sensible proposal, but the drafting of the resulting legislation should ensure that directors are not unnecessarily blamed nor held to an impossibly lofty calibre. If the new regime is too tough on directors individually (and departs too far from the principle of collective responsibility), it may be difficult for large companies to attract top talent to join the board (which is ultimately in the best interests of the business). The new regime must also ensure that it does not encourage directors to 'jump ship' at the first sign of trouble, to avoid the risk of personal economic or reputational consequences for staying at the helm and trying to navigate the company through choppy waters. Consequential issues around D&O insurance and liability allocation will also be brought to the fore with any toughened stance on board accountability.

Companies in the UK or overseas parent companies with UK subsidiaries who may fall under the new definition of PIEs should begin preparations now for the realities of complying with the Code and the associated changes that may be implemented following the outcome of consultation under the Whitepaper, especially the large costs involved (that were formerly reserved for the largest listed entities).

The consultation period under the Whitepaper runs until 8 July 2021, at which point we anticipate more clarity on the scope of the new requirements. The UK Government will therefore need to carefully consider and weigh up public concern and its ESG strategy, with economic recovery, ensuring that it is fulfilling its duties of promoting the success of, avoiding conflicts of interest, and acting with reasonable care, skill and diligence towards, British business and the British public alike.

Five steps to reduce law firm emissions

Tue, 08 Jun 2021 16:32:15 GMT

By Alexandra Lloyd

This article was originally published here

We’ve come up with a list of five steps a law firm should take to address their carbon footprint. We’ve listed them below, along with hypothetical numbers for a law firm sitting in the middle of 2019’s Global 200 by revenue.

We are writing this article not just to provide a blueprint for law firms to reduce their carbon emissions, but also to show the low cost of carbon offsetting. The cost for our hypothetical law firm to purchase carbon offsets would be approximately 0.12% of annual revenue, which equals $814,800 for our hypothetical law firm. Given the multi-year timeline for steps like implementing a hub-and-spoke office model, the sensible strategy for law firms is to implement a carbon emissions reduction plan reviewed annually, and purchase carbon offsets for what you can’t offset. PartnerVine has done that with Climate Neutral, and it was much easier and less expensive than we expected.

In this article, we describe each step, the estimated carbon emissions reduction for our hypothetical law firm and the methodology for calculating the numbers.

Full Article

ESG from a European Perspective

Tue, 08 Jun 2021 16:32:10 GMT

By Judith Bussé & Blanche Devos

This article was originally published here

The COVID-19 pandemic has made it clearer than ever that there is a pressing global need for a coherent, sustainable, social and climate-friendly business and governance model for both private and public companies. In line with the UN’s Sustainable Development Goals (2015) and the Paris Climate Change Agreement (2015), Europe set itself the ambitious target to reduce its emissions by at least 50% by 2030 and achieve climate neutrality by 2050.

Recent EU initiatives have repeatedly showcased a willingness to allow ESG a central role within the legislative process. Examples include the EU Action Plan of Sustainable Growth (March 2018), the Green Deal (December 2019), the Proposal for a European Climate Law (March 2019), the Circular Economy Action Plan (March 2020), the Farm to Fork Strategy (May 2020), the Climate Pact (December 2020) and the EU Regulation on Sustainability-Related Disclosures (March 2021).

Most recently, on April 21, 2021, the European Commission presented its new Sustainable Finance Package. This ambitious package is intended to help improve the flow of money towards sustainable activities across the European Union, and it includes proposals for an EU Taxonomy Climate Delegated Act, a new Corporate Sustainability Reporting Directive (CSRD) revisiting the rules introduced by the Non-Financial Reporting Directive (NFRD), and six Amending Delegated Acts updating the existing rules on sustainability assessments for investment and insurance products.

ESG from a European perspective

While the concept of “ESG” is now broadly understood, some confusion remains regarding which environmental, social and governance factors should count towards the EU’s sustainability target, and which legislative instruments should regulate the different aspects of ESG. Moreover, a lack of transparency, accountability and comparability makes it difficult for investors to fully understand the financial risks resulting from the various sustainability-related crises we face, and to proactively look for investment opportunities addressing environmental and social problems.

The 2019 Communication on the European Green Deal is the EU’s response to our current climate and environment-related challenges. This Communication proposes a series of measures and legislative instruments that are intended to transform the EU by 2050 into a modern, resource-efficient and competitive economy, with no net emissions of greenhouse gases, and where economic growth is decoupled from resource use. It also aims to protect, conserve and enhance the EU’s natural capital, and to protect the health and well-being of citizens from environment-related risks and impacts. The Green Deal is looking to achieve a socially-just transition to a sustainable economic system by providing a Just Transition Mechanism and Fund, focusing on the regions, sectors and citizens most at risk from this transition.

One of the means to achieve the objectives relating to climate neutrality is the transformation of industry towards a circular economy. With a focus on resource-intensive sectors (like textiles, construction, plastic and electronics), the Circular Economy Action Plan will include a “sustainable products” policy to support the circular design of all products based on a common methodology and common principles, as well as a “right to repair,” and measures to empower consumers to make informed decisions and play an active role in the ecological transition. By prioritizing the reduction and reuse of materials before recycling them, and by fostering new business models with innovative products / services, the Circular Economy Action Plan aims at preventing environmentally harmful products from being placed on the EU market.

As significant investments are required to achieve the climate and energy targets that have already been set for 2030, public and private funding will need to be explored and facilitated. Hence, as one of the first steps in the strategy towards sustainable growth, the European Commission has reviewed the Non-Financial Reporting Directive (2014/95/EU, see below for more details). The disclosure of non-financial information should contribute to the measuring, monitoring and managing of undertakings’ performance and their impact on society. In turn, this should allow investors to direct financial and capital flows to green, social and overall sustainable investments.

To further incentivize ESG commitments, investments and sustainable growth, the European legislator has developed a common language and definition of what is considered “sustainable” in the EU Taxonomy Regulation (2020/852). This Regulation, which established a framework to facilitate sustainable investment, will be amended, updated and completed in the course of the coming months and years. Currently, it sets out a classification system for environmentally sustainable activities in relation only to climate change mitigation and climate change adaptation objectives. In the near future, the Regulation will be amended to cover other objectives as well – relating to pollution prevention, the transition to a circular economy, the sustainable use and protection of water, and the protection and restoration of biodiversity and ecosystems.

The Recent Sustainable Finance Package

Sustainable finance is about re-orientating investment towards sustainable technologies and businesses, by decoupling as far as possible economic growth from the use of resources, so as to minimize ESG-related damage. With the launch on April 21, 2021 of the Sustainable Finance Package, the European Commission announced its aim to adopt the legal fundaments and framework to create a sustainable financial EU ecosystem, focused on increased transparency and providing tools for investors to identify sustainable investment opportunities. Such opportunities have a key role to play in channeling private investment (as a complement to public funding) for the successful transition to a climate-neutral, climate-resilient, fair economy.

The Sustainable Finance Package, with its different proposals for legislative instruments (detailed below), represents another critical step in the European Commission’s ongoing efforts to influence investment preferences towards more sustainable financial strategies.

As a main game-changer, the Sustainable Finance Package introduces the EU Taxonomy Climate Delegated Act (supplementing the EU Taxonomy Regulation, described above), which makes it clearer which economic activities most contribute to meeting the EU’s environmental objectives and which categorizes the activities strongly contributing to preventing and responding climate change. It aims to help investors in their decision-making process and incentivizes sustainable solutions using science-based criteria. The Delegated Act was officially adopted by the EU at the end of May 2021.

Secondly, companies will be required to provide accurate and valid sustainability information following the implementation of the Commission’s proposal for a Corporate Sustainability Reporting Directive. One of the aims of this proposed directive is to expand the existing reporting rules for public-interest entities, introduced by the Non-Financial Reporting Directive (2014/95/EU) and in force since 2018, and extend them to private companies. The Commission will now further discuss the proposal with the European Parliament and the Council.

Furthermore, to minimize the risks to the financial system and markets, six proposed Amending Delegated Acts on investment and insurance advice, fiduciary duties, and product oversight and governance, would require that investment companies (including advisers, asset managers, and insurers) refer to sustainability matters in their protocols and investment advice to clients (for example, by highlighting the impact of potential natural disasters on the value of investments).

These Amending Delegated Acts would include the requirement that financial advisers obtain information about their clients’ sustainability preferences and provide a statement explaining the additional requirements financial firms are subject to in order to assess their own sustainability risks. The amendments would introduce adjustments to important existing legislative instruments on investor protection, namely the second Markets in Financial Instruments Directive (MiFID II) and the Insurance Distribution Directive (IDD). These amendments, among several other financial services rules, would constitute a major step in the battle against greenwashing and are expected to be in force as of October 2022.

Booted and spurred towards a more sustainable future

Although many steps still need to be taken, and time will certainly reveal legal gaps that still need to be tackled, these various EU action plans already show that ESG has become one of the most important new concepts for all those conducting business and investing in the EU’s internal markets.

The EU had already emphasized its commitment to implementing the UN Sustainable Development Goals in a variety of ways. The recent COVID-19 pandemic has further galvanized it in its aims, by providing an urgent need for Europe to re-boost its economy and therefore the ideal opportunity for this to be done in the most sustainable manner possible.

From an international point of view, the long awaited “sustainable finance taxonomy” will most likely become a global standard for green investment. The past has proven that EU standards often generate a global impact – a phenomenon called the “Brussels Effect.” In this way, third countries / international companies demonstrate a strong interest in aligning with EU standards, and adjust their operations to abide by EU regulatory requirements (this happened, for example, in the case of the GDPR). The Brussels Effect shows the EU’s capacity to influence global governments and operations through its policy making. Not only is it to be expected that global financial companies will follow the EU’s taxonomy in order to enter the world’s largest ESG market, it is also likely that the EU will ring its ideas on ESG-friendly investment to the table when negotiating international trade and other multilateral agreements, thereby further expanding its role globally and speeding up a world-wide roll-out of sustainable development.

The ESG Movement: Why All Companies Need to Care

Thu, 03 Jun 2021 16:28:44 GMT

By Womble Bond Dickinson

This article was originally published here

Environmental, Social, and Governance (ESG) issues are at the forefront of conversation in virtually every sector. Last month, Womble Bond Dickinson launched its “ Doing Well by Doing Good ” campaign, a thought leadership series focused on ways in which environmental and social governance impact business. The series kicked off with a keynote presentation by Pamela Cone, Founder and CEO of Amity Advisory and Vice President of Social Impact and Sustainability Officer at Milliman; the following article is based on that presentation. Click here to watch the full video of Cone’s presentation .

As America emerges from the COVID-19 pandemic, many people are grateful that they have jobs to do and homes to live in, knowing that many were and are not so fortunate. The pandemic prompted a rapid, large-scale change in the way people live and work. It shook businesses and individuals out of their inertia – and they discovered new ways of doing things. That momentum can lead to permanent, positive, and sustainable improvements.

“There have been good things we’ve learned from the pandemic and challenging things we’re still understanding,” Cone said. “The jury is still out on what society will be post-pandemic – and we are the jury. Will the lessons of the pandemic drive us to a better tomorrow?”

The pandemic showed that corporations could help address society’s most pressing challenges and help “build back better.” The current focus on ESG is, in part, a reflection of these concepts.

The Rise of the ESG Movement

Fifty years ago, famed economist Milton Friedman declared that “The social responsibility of business is to increase its profits.” But pursuing shareholder returns with no regard for other concerns may not be in the long-term best interests of a company or its shareholders. Put simply: companies cannot survive in societies that are failing. So nearly all companies now recognize that societal impact must be part of their business strategy.

“But for too many companies, societal impact and shareholder returns are pursued separately; this is no longer sufficient – if it ever was,” Cone said.

ESG offers a more holistic approach by considering the entirety of a business’s impact on society. The pursuit of societal impact is integral to strategy and value creation, rather than separate functions.

“The values of a company are inextricably linked to the value of a company,” Cone said. And as core business decisions, issues surrounding social impact and responsibility belong with the board, not a side committee of employee volunteers, and should be part of the regular board agenda.

As early as 2010, the ESG topic was discussed by a group of CEOs urging businesses to take a longer-term view. In August 2019, the Business Roundtable, a group of CEOs from nearly 200 major U.S. corporations, issued a statement redefining the purpose of a corporation. This new definition encompasses investing in employees, delivering value to customers, dealing ethically with suppliers, and supporting outside communities as core business goals, in addition to driving profits and maximizing shareholder value.

Even the 2020 theme of the World Economic Forum in Switzerland reflected this broader purpose, as the meeting dealt with “Stakeholders for a Cohesive and Sustainable World.”

Also, Blackrock’s Larry Fink says climate risk is a crucial concern for companies. Fink’s influential 2021 Annual Letter to CEOs says, “I believe that the pandemic has presented such an existential crisis – such a stark reminder of our fragility – that it has driven us to confront the global threat of climate change more forcefully and to consider how, like the pandemic, it will alter our lives.”

From Transactional to Transformational – The Evolution of ESG

“The pandemic raised awareness of the interconnectivity of us all,” Cone said. Decisions made and actions taken by a company or an individual impact the well-being of others – and that must be a part of the equation, she said.

Even as life begins to return to normal, employees, customers, and other stakeholders increasingly expect companies to take a stand on significant issues. Issuing a statement, while important, is just the first step.

Stakeholders expect companies to make systemic changes in how business is conducted and corporate decisions are made.

Cone identifies three stages of social impact programs. The first, which she calls Transactional, is based on random good deeds with no real driving purpose or goal. The company may invest money in these programs, but rarely time or talent. The second stage is the Transitional, in which a company adds focus to its social investment and incorporates time and talent contributions. The third stage is Transformational, as companies use their highest and best skills and enter into partnerships to achieve outcomes that make a difference.

Transformational impact is core to the business, consistent with its larger purpose and collaborative in nature, Cone said. For example, Cisco Canada piloted a program to use their video conferencing technology to connect indigenous community schools in northern Canada to educational, artistic, and cultural resources. The program has been wildly successful, and more communities are seeking to participate.

How Lawyers Can Drive ESG

“Lawyers are in a remarkable position to encourage all things ESG and help manage the risks associated with it,” Cone said. Attorneys touch every industry globally and are often considered trusted advisors, either within an organization or as outside counsel, so they are well-positioned to be leaders in driving a company’s ESG efforts.

Claudia Toussaint, General Counsel and Chief Sustainability Officer of Xylem, recently told Corporate Counsel magazine that ESG initiatives are “a natural accompaniment to the evolution of the general counsel.”

Like most business activities, there is legal risk associated with ESG. Whether in-house or outside counsel, lawyers are needed to ensure that actions comply with relevant law and minimizes the company’s exposure to liability. Contemporary ESG-related legal concerns include anti-discrimination efforts, data privacy, human rights, supply chain, regulatory requirements related to climate change, and FTC rules regarding “green” representations.

Standard Chartered Senior Legal Counsel Layla El-Wafi writes in a 2021 ACC Docket article , “In-house lawyers can consider their role of mainstreaming ESG in business through a multifaceted lens, taking a wider view of their role in advising their client to remain compliant with laws and policies. They can and should be part of setting the ESG strategy and subsequent steps to operationalize responsible business conduct.” The same advice can apply to outside counsel acting as a trusted business advisor to a client.

ESG Tools, Metrics, and Goals

As companies become more deliberate about ESG, it is increasingly essential for organizations to be on the same page regarding how they discuss these issues. Enter the U.N. Global Goals for Sustainable Development . This program aims to expand healthcare and education, eliminate extreme poverty, promote equality for women, provide sustainable power and clean water for all, and protect the environment, among other high-level goals.

The U.N. Global Goals have quickly become the common global language when addressing society’s most pressing problems, Cone said. The assumption is that participating businesses will work with other companies that share these goals.

Identifying important goals is one step – measuring a company’s progress is another. Various metrics-based reporting tools (e.g., SASB, GRI, CDP, TCFD) help gauge ESG efforts, but no one knows which tool or tools will emerge as the standard, Cone said. Rather than spend time trying to answer this question, she advises that companies instead focus on identifying metrics and objective targets, then work toward meeting them.

Where Do We Go from Here on Climate Change?

Cone sees climate change as a significant issue where business is well-equipped to help – and where the cost of inaction is high. She points to a Plan C Advisors report identifying four trends driving companies to take action on climate change:

The financial impacts of climate change are intensifying;
World governments are acting;
Popular attitudes are shifting; and
Investors are holding boards of directors accountable.

“Many of us are already feeling the effects of the climate emergency. It no longer is a problem of the future,” she said. Governments across the globe are already taking steps to rein in climate change. For example, the U.K. has passed a net-zero emissions by 2050 law. The Biden Administration recently issued an executive order for federal agencies to assess the risk that climate change poses to the U.S. economy and make recommendations on reducing those risks.

“Attitudes are shifting. Did you ever think you would see an electric Ford F-150?” Cone asked. The growing public/consumer demand for private action on climate change is something businesses need to consider.

And many are. In the last five years, there has been a five-fold increase in companies making commitments to reduce carbon emissions. For example, Apple has committed to be 100 percent carbon neutral by 2030 – and vendors, suppliers, outside law firms, and other partners will have to work toward these targets, too. Major corporations will not allow business partners who are part of their Scope 3 calculations to hold them back from meeting these stated goals.

Climate change and other ESG initiatives shouldn’t be seen as a challenge or an impediment to business but as an opportunity, Cone said. Businesses that embrace social responsibility and climate sustainability will be best positioned to serve a market that will demand such action from private companies.

“This is the opportunity of our generation – our lifetime,” she said.

(E)ESG - Why It Matters to Employment Experts

Tue, 01 Jun 2021 16:40:35 GMT

By Bryan Cave Leighton Paisner

This article was originally published here

Summary

In our hyper-transparent and increasingly joined up world, the concepts of corporate social responsibility and socially responsible investing are gaining greater currency. Over the last decade, and catalysed by COVID-19 over the last year, Boards and General Counsel have focused on the role of ESG in driving responsible and sustainable business conduct approaches which acknowledge that the purpose of a company should be amplified beyond just shareholders to also explicitly include their employees, clients and the communities in which they operate. In fact, the Chief Justice of the Delaware Supreme Court, the Honourable Judge Leo Strine in a piece he wrote for the Financial Times , has already suggested the next generation acronym – EESG: Employees, Environment, Social and Governance.

So, what does this mean and why is it important for employment professionals? Hopefully the first E is a clear hint (it’s not a typo)!

What is ESG?

ESG is the umbrella term for broad range of Environmental, Social and Governance factors against which a company’s stakeholders can holistically assess the performance, value (risk/opportunity), investment in respect of the company. Many ESG factors contribute to a company’s “social licence to operate” and responsibility to its stakeholders and the creation of long-term holistic value for a company – both financial and in terms of reputation.

Even pre-pandemic, there was a rise in “responsible investment”, essentially investors looking for companies with an explicit objective of making a positive impact on the environment and society as well as a financial return. The pandemic, with its unprecedented impact on the workplace and business value chains, has clearly highlighted the critical importance of the social element of ESG. Statistics show that “millennials”, or the up and coming investors, are twice as likely as other generations to invest in companies targeting social or environmental goals. As such, ESG is no longer something that companies can ignore – either as part of their approach to addressing risk or creating long-term value.

How does ESG impact business?

“ESG” has emerged as a key driver behind:

pivoting and transitioning business models and assets to build resilience and improve performance around issues such as climate, deforestation, natural capital, human rights – modern slavery and child labour, corruption, fair taxation, and transparent and inclusive governance and executive remuneration;
overhaul and redesign of value/supply chains to achieve greater resilience;
new “green”, “social” & “sustainable” goods, services & businesses;
new laws and evolving performance standards, obligations, reporting;
evolving “legal compliance” to include holistic ESG risk governance; and
development and use of multi-stakeholder sectoral collaboration to address complex issues across industries, such as the Bangladesh Accord in 2013 regarding safety and labour standards in the textile / garment industry.

So what does this mean in practice for in-house legal teams and their companies? Addressing ESG related issues and risks requires legal (including employment experts), risk, compliance and ethics, environment and social risk teams (with other business stakeholders) to develop an integrated and interdependent legal and risk governance approach and framework across 3 key areas

legal and regulatory compliance;
social accountability risk governance; and
alignment with stakeholder expectations and trust

Why – ESG related issues often complex and arise in situations that are driven by the interdependence between all 3 of above factors – such as the collapse of garment factory in Bangladesh with no or poor safety, labour conditions and using female and child workers. A singular and/or primary focus on legal compliance alone may not fully account for or provide resilient business decisions / position when the interests of a company’s stakeholders are also considered – especially over time, in complex business environments, or where law is absent or contrary to international standards or a fundamental breach of ethics, public or stakeholder trust has occurred. As a result, local legal compliance may not be sufficient holistic legal risk governance for the company opposite its stakeholders and their interests in the company. Using an ESG framework, informed by authoritative international standards, industry best practice and stakeholder engagement (shareholders, investors, employees or the wider community), can provide:

business resilience, agility and growth
holistic understanding of value – mitigate risk and maximise opportunity
regulatory and legal risk benefits – especially where national law is unclear, developing or contradictory when assessed against authoritative international standards
reduce operational disruption and costs
positive stakeholder and managerial interest
increase employee productivity
attract and retain employees, clients, business partners, suppliers and customers

As the “social” and “governance” aspects of ESG are particularly significant in an HR or employment law context, employment specialists are increasingly central to supporting their businesses manage legal / regulatory compliance issues in a manner that also supports and promotes ESG goals and standards.

What are the employment-specific aspects of ESG

There are a number of key themes emerging in ESG which relate to a company’s and employer’s relationship with its workforce and social capital. These include:

Diversity and equality – how diverse is your workforce? How fair are your remuneration structures?
Do you have a human rights policy and due diligence approach – that goes beyond dealing with safety and labour standards? Do you have a structured and dynamic risk management approach to address modern slavery and child labour issues associated with your business and your entire value chain?
Do you pay Living Wages and/or fair wages? Do you have approaches for dealing with local and/or indigenous communities that are consistent with international standards?
Health and well-being – what is your health and safety record? Do you look after the physical and mental health of your employees?
Training – do you invest in people and in skills training?
How do you undertake stakeholder engagement and diligence to identify social and/or governance issues or risks, including with civil society organisations? In what circumstances do you use NDAs?

We are already seeing a sharp focus on these issues, both to comply with current and developing regulatory obligations and address pressure from investors, consumers, the media and other stakeholders. For example, a lack of diversity at board level, or poor reputation regarding how certain behaviours are dealt with, could deter investment or funding. Inclusion and diversity – embedded through a company’s governance structure has also become a matter of interest to the FCA, and is of increasing importance to regulated firms. As set out in the speech by Sheldon Mills, FCA Executive Director, the FCA is encouraging firms to improve in this area, and is considering how best to use its supervisory powers, such as requiring firms to explain a lack of diversity or their hiring strategy.

As such, HR’s approach and relevant policies and procedures (particularly in relation to discrimination or equality) will be instrumental in ensuring that companies remain appealing to senior managers and employees, for investment and to comply with the requirements of the FCA. It is no longer enough simply to have the policies in place – companies must ensure that there is an aligned approach to build ESG leadership and competence, support multi-disciplinary engagement (across key functions including legal, compliance, risk, sustainability and CSR) around developing governance structures, incentives, management systems, procedures, reporting, and a culture that fosters integrating ESG issues and value.

As company’s continue to engage with I&D and broader social and governance issues, HR specialists and in house-employment counsel are key contributors to a company’s successful implementation of its (E)ESG strategy.

Practical Tips for Employment Experts

Consider your recruitment practices. Do you recruit from a diverse range of people? What can you do to increase the diversity of your workforce?
Take time to consider potential issues now to resolve them quickly. Consider running surveys regarding inclusion and diversity and employee engagement, and identify potential concerns around the employee experience.
Take an integrated approach with other internal specialists. What are your wider ESG goals as a business and how can you use employment practices to support them? For example, consider the environmental impact of business travel and whether ESG targets can be linked to appraisals or to remuneration structures.
Make sure that you have adequate systems for supporting the health and safety of your employees. This is not limited to physical health – focusing on healthy working practices, work-life balance and mental well-being is increasingly important.

Review your existing complaints procedures, including both grievance procedures and whistleblowing procedures – make sure that they comply with current legal requirements including higher standards imposed at a sector level, for example in financial services.

Climate: World at risk of hitting temperature limit soon

Wed, 26 May 2021 19:40:18 GMT

By David Shukman

This article was originally published here

It's becoming more likely that a key global temperature limit will be reached in one of the next five years.

A major study says by 2025 there's a 40% chance of at least one year being 1.5C hotter than the pre-industrial level.

That's the lower of two temperature limits set by the Paris Agreement on climate change.

The conclusion comes in a report published by the World Meteorological Organization (WMO).

The analysis is based on modelling by the UK Met Office and climate researchers in 10 countries including the US and China.

In the last decade, it was estimated that the chance of any one year reaching the 1.5C threshold was only 20%.

This new assessment puts that risk at 40%.

Leon Hermanson, a senior Met Office scientist, told BBC News that comparing projected temperatures with those of 1850-1900 shows a clear rise.

"What it means is that we're approaching 1.5C - we're not there yet but we're getting close," he said.

"Time is running out for the strong action which we need now."

The researchers point out that even if one of the next five years is 1.5C above the pre-industrial level, it'll be a temporary situation.

Temperature curve

Natural variability will mean the following few years may be slightly cooler and it could be another decade or two or more before the 1.5C limit is crossed permanently.

The Paris Agreement established the goal of keeping the increase in the global average temperature to no more than 2C and to try not to surpass 1.5C - and that's understood to mean over a long period rather than a single year.

According to Dr Joeri Rogelj, director of research at the Grantham Institute, Imperial College London, "the 1.5C in the Met Office announcement should not be confused with the 1.5C limit in the Paris Agreement".

"The Paris targets refer to global warming - that is, the temperature increase of our planet once we smooth out year-to-year variations," he explained.

"A single year hitting 1.5C therefore doesn't mean the Paris limits are breached, but is nevertheless very bad news.

"It tells us once again that climate action to date is wholly insufficient and emissions need to be reduced urgently to zero to halt global warming."

A landmark report by the UN climate panel in 2018 highlighted how the impacts of climate change are far more severe when the increase is greater than 1.5C.

At the moment, projections suggest that even with recent pledges to cut emissions of greenhouse gases, the world is on course to heat up by up to 3C.

The WMO's secretary-general, Prof Petteri Taalas, said the results of the new research were "more than mere statistics".

"This study shows - with a high level of scientific skill - that we are getting measurably and inexorably closer to the lower target of the Paris Agreement on Climate Change," he explained.

"It is yet another wake up call that the world needs to fast-track commitments to slash greenhouse gas emissions and achieve carbon neutrality."

Prof Ed Hawkins, a climate scientist at the University of Reading, told me that if the new forecast is proved right "it does not mean that we have exceeded the Paris Agreement limit".

He points out that two individual months in 2016 saw a rise of 1.5C.

"As the climate warms, we'll get more months above 1.5C, then a sequence of them, then a whole year on average above 1.5 and then two or three years and then virtually every year," Prof Hawkins said.

He also stresses that 1.5C is "not a magic number that we've got to avoid".

"It's not a sudden cliff edge, it's more like a slope that we're already on and, as the climate warms, the effects get worse and worse.

"We have to set a line in the sand to try to limit the temperature rise but we clearly need to recognise that we're seeing the effects of climate change already in the UK and around the world and those effects will continue to become more severe."

The report comes in the approach to the COP26 summit on climate change, due to be held in Glasgow in November.

The summit aims to raise ambition among world leaders on tackling the climate crisis.

Environmental, Social and Governance (ESG) from an In-house Counsel Perspective (United States Focus)

Wed, 26 May 2021 13:31:19 GMT

By Alexander D. Gonzalez, Esq. and Richard Reich, Esq.

This article was originally published here

Key Takeaways:

Create a dedicated ESG team within your organization and mobilize leadership to advance and report on your company’s ESG goals.
Develop and implement a plan that is clearly communicated within and through your organization.
Be prepared to disclose your company’s findings publicly.
Draft a Corporate Sustainability Report that leverages available standards, incorporates qualitative and quantitative feedback from key stakeholders, and matches your company’s initiatives and goals.
This is an evolving field: continually monitor federal and state requirements for changes or updates to existing law and practices.

While the focus on Environmental, Social and Governance (ESG) issues is not new, the importance of reporting and treating ESG as a key component of your business and governance processes has increased in recent years.

The Global Report Index (GRI) stemmed from public outcry in 1997 over the environmental damage caused by the Exxon Valdez oil spill. Disclosure standards and ratings organizations like the Sustainability Accounting Standards Board (SASB), Institutional Shareholder Services (ISS), MSCI and others, were subsequently dedicated to ESG. Industry associations have since stepped in to support their members with ESG-related resources, information sharing, and advocacy.

The shift is driven by ESG-minded investors who are demanding that their money be invested in ESG-minded companies and funds. For example, in January 2021, the latest annual “ Fink Letter ” published by Larry Fink, Chairman and Chief Executive Officer (CEO) of BlackRock, put ESG, climate change and diversity, equity, and inclusion (DEI) at the forefront. BlackRock calls for a global uniform ESG disclosure standard and, in the interim, endorses reporting under SASB and the framework provided by the Task Force on Climate-related Financial Disclosures (TCFD).

The Fink Letter specifically asks public companies to provide climate-related risk disclosures regarding the incorporation of climate risk as part of board oversight and strategy, and to include a discussion of long-term DEI strategies in company sustainability reports. BlackRock cautions companies and boards that they may vote against directors where disclosures are “insufficient to make a thorough assessment”, or where a “company is not adequately addressing climate risk.”

A rise in institutional investor demands coupled with the lack of a global uniform ESG disclosure standard means that it will be incumbent upon you and your company to determine what to disclose publicly and under what standards to report the information. This article will identify what ESG means from an in-house counsel perspective and steps for developing your company’s ESG program.

1. Top-Down Leadership – Governance and Executive Management

A successful ESG program needs structure, oversight, and leadership. The promotion of sound governance practices starts at the board level. The days when the focus was mainly on the “independence” of board members are over. Today, most stakeholders expect that the makeup of the board will include directors with diverse experiences and backgrounds. Investors and, to an increasing extent, regulators, expect boards to be racially and ethnically diverse, and gender diversity is a priority. As recently as December 2020, NASDAQ proposed a rule to the United States Securities and Exchange Commission (SEC), with the goals of advancing board diversity and enhancing transparency of diversity statistics through new proposed listing requirements.

This new rule, if approved by the SEC, would require certain NASDAQ-listed companies to disclose annual diversity statistics regarding their directors’ voluntary self-identified characteristics and to include on their boards at least two diverse directors (as defined under the rules), or to disclose publicly why their boards do not, in fact, include diverse directors. In addition to the emphasis on diversity, strong ties to the communities in which the company operates are encouraged as well.

As the focus on ESG increases and evolves, the board must take an active role in oversight of ESG either directly or through its committees. In particular, the board should consider both risks and opportunities relating to ESG. A company’s nominating and governance committee is often in the best position to make recommendations to the board on these matters given the leading role “governance” plays in ESG. However, compensation committees and audit committees will be key as well. The compensation committee is responsible for oversight of human resources – the human capital side of ESG – and the audit committee is responsible for oversight of the financial reporting and compliance process.

It will be necessary for executive management to plan, implement and lead your company’s ESG strategy forward. This will require that employees be dedicated, in whole or in part, to your ESG program (your ESG Team). Your ESG Team members will need to work within their areas of expertise and cross-functionally across the business, in order to plan and implement your company’s ESG strategy, as well as accurately collect and report ESG data.

It is critical that your ESG Team has the support of executive management, which is why companies have created offices and divisions dedicated to ESG that are led by senior company leaders and report to the highest level of executive management. Companies assign responsibility for ESG to various executive officers, and many have established a dedicated executive position, “Chief Sustainability Officer,” for this purpose. Irrespective of who is responsible for ESG at your company, a key component to a successful ESG program is leadership and, with it, buy-in at the highest levels of the organization.

2. Engagement

With a sound governance structure in place and clear direction from the board and executive management on ESG, your ESG Team should be able to move the ESG program forward from inception to implementation. As discussed below, numerous organizations provide scores and assessments of a public company’s disclosure on ESG using a combination of established reporting frameworks and standards, as well as their own proprietary methods. They are commonly referred to as “raters and rankers.” The scores that these raters and rankers assign to your company are based largely on your public disclosures, and will serve as a starting point to assess how investors view your company’s ESG efforts.

Many companies also receive feedback from their investors during regular investor relations activities. Using this feedback, as well as the scores from the raters and rankers, will help you initially assess how your company compares to its peers and how much capital needs to be invested to achieve your company’s ESG goals. This is an area where your company’s ESG experts – cross-functional teams including accounting, environmental, engineering, finance, human resources, operational and legal departments – can provide value.

Your ESG Team should also engage regularly with external advisors and stakeholders with knowledge in these fields. These habitual engagements will help your ESG experts identify issues, test theories and ideas, understand the evolving ESG landscape, become better business partners to your company, and effectively liaise with external stakeholders.

3. ESG Reporting, Data Aggregation and Assessments

The ESG reporting frameworks and standards, listed below, will serve as a starting point for forming communications to the public regarding your company’s ESG practices and performance.

Many companies now provide a stand-alone Corporate Sustainability Report that sets forth the company’s sustainability strategy and leading practices, while attempting to satisfy the expectations of the audience, which includes its investors. A small number of companies also provide a report that is integrated with the company’s annual financial reports. Given that there is no uniform ESG disclosure framework or standard, your company can consider reporting its ESG practices and performance under the following:

Global Report Index (GRI);
Sustainability Accounting Standards Board (SASB) and International Integrated Reporting <IR> Framework (IR) (SASB and IR plan to merge by mid-2021);
Task Force on Climate-related Financial Disclosures (TCFD);
International Accounting Standards Board (IASB);
Climate Disclosure Standards Board ;
The United Nations’ Sustainable Development Goals ; and
The UK Companies (Director’s Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 .

Data aggregators such as: CDP , Dow Jones Sustainability Indices , Bloomberg and Refinitiv collect privately- and publicly- available data to measure and understand a company’s ESG impact for investors and other stakeholders. The analytics created by the aggregators are used for informing ESG investments, portfolios, corporate strategies and risk management, among other purposes (depending on the stakeholder).

Other financial research institutions and raters and rankers – such as MCSI, ISS, FTSE4Good , Sustainalytics, a Morningstar company , Vigeo.Eiris, a Moody’s company and the S&P Global Corporate Sustainability Assessment – provide guidelines in their methodology that factor into ESG scoring and assessments. MSCI and ISS ESG are the most commonly relied-upon assessors; ISS more so because of its influence over public companies as the leading proxy advisory firm. A “vote” or “no-vote” recommendation by ISS can positively or negatively impact a company’s proxy proposal by twenty-to-thirty percent. This can make the difference between an approved or rejected proxy proposal. ISS and Glass Lewis & Co. , the other major proxy advisory firm, increasingly have leveraged ESG factors into their voting policies in recent years. It is important to gain at least a broad understanding of these leading frameworks and rater-and-ranker methodology to begin to form your communications strategy.

4. Institutional Investors and Shareholder Activism

Institutional investors and asset management firms like BlackRock, T. Rowe Price, Vanguard and State Street have their own ESG voting policies. These firms expect greater emphasis on, and disclosure of, ESG and sustainability practices – specifically, climate change risk disclosure, DEI, human capital management and compensation practices. To the extent a company’s ESG and sustainability practices are not satisfactory to them, firms like BlackRock may hold board members and nominating and corporate governance committee members accountable by voting against their elections at their company’s annual shareholders meetings.

The most salient focus area for climate-change advocates comes from the recommendations of the TCFD: under the framework companies are expected to explain how their initiatives align with the goals of limiting global warming to “well below” two degrees Celsius and reaching net zero greenhouse gas (GHG) emissions by 2050. The TCFD framework calls for climate-specific disclosures across four reporting pillars: governance; strategy; risk management; and metrics and targets.

Additionally, leading investors now expect companies to disclose information on workforce demographics like gender, race, ethnicity and advancements in DEI – all typically required to be filed with the United States Equal Opportunity Commission’s EEO-1 data collection survey . Accompanying the demand for these disclosures is the threat of votes against board members, specifically committee chairs, in the absence of what investors deem to be adequate disclosure according to their voting policies.

Shareholder activism has also played a role in promoting ESG and sustainability practices. Activists have filed suit against companies seeking to change their practices and/or to affect their reputation and business. Moreover, shareholder activists continue to launch ESG- and sustainability- focused proxy battles and submit related proposals at shareholder meetings. In the new age of ESG and sustainability, investors have shown an increased level of support for climate-related, board diversity and political activity proposals, which in prior years were overlooked or viewed by many companies simply as nuisances.

5. Federal Law, Regulatory Requirements and State Considerations

The SEC currently requires public companies to disclose potential risks if they are “material” to a company, and an emphasis has been placed on climate change; particularly in a company’s risk factors and management’s discussion and analysis of financial condition and results of operations.

In 2020, the SEC adopted rules for human capital management disclosure, using a principles-based approach to disclosure among a set of 12 topics that must be disclosed if material to a company’s human capital resources. These topics cover human capital-related resources, measures and objectives that a company considers when managing its business.

In furtherance of these ESG initiatives, the SEC responded to increasing investor and political demand by evaluating its regulations on climate change disclosures. In a public statement in March 2021, then-Acting Chair Allison Herren Lee welcomed input on climate change disclosures. The SEC is seeking public input, through a series of 15 questions on the SEC’s regulations; disclosure rules and guidance on climate change; ESG and compensation disclosures, as it relates to existing requirements; potential new requirements; and potential frameworks or standards to adopt. The SEC is calling for these disclosures to be submitted by June 2021, and Chairman Gary Gensler expressed the SEC’s intent to move quickly towards rulemaking thereafter.

ESG and securities law practitioners need to keep current on SEC and SASB reporting requirements as new rules are adopted. Material misstatements or omissions in ESG disclosures will be areas of focus for the SEC, shareholders and other stakeholders, and a source of potential liability for public companies and private companies who issue securities. SASB standards suggest disclosure of topics and accounting metrics covering several areas: energy management; water management; responsible drinking and marketing; packaging lifecycle management; and environmental and social impact of ingredient supply chains.

Also note that it is equally important to follow state efforts to impose ESG mandates through legislation. For example, in 2018, California passed a law that required public companies headquartered in the state to have at least one woman on the board of directors, and that number increases based on the size of the board.

Along the same lines, in 2020, California passed another law that requires public companies headquartered in the state to have at least one director on their board who is from an underrepresented community, defined as “an individual who self‑identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self‑identifies as gay, lesbian, bisexual, or transgender,” and the number of directors required to meet this criteria increases depending on the size of the board.

6. A Quantitative and Qualitative Understanding of Your Company’s Business

With myriad disclosure frameworks and standards, laws and regulations, and stakeholder expectations, the more you know about your company and its business, the more value you can bring to your company’s assessment and implementation of an ESG framework.

The ESG frameworks or standards that you follow provide a roadmap for improving ESG scores from raters and rankers, and the topics cover several practice areas and disciplines. It is crucial that all members of your ESG Team are engaged and working cross-functionally with internal and external experts and business units in the strategy, planning and reporting process.

Some inquiries will be answered most effectively by employees with specialized expertise and/or a deep knowledge of the business area. It is also necessary to understand which standards do not apply to your company, which standards are easily achievable for your company, and which standards will require significant investment to achieve. The practices rewarded by the raters and rankers may not always be relevant to your company. The key is to clearly communicate and report your company’s ESG and sustainability mission and find the intersection of your company’s sustainability strategy and the practices that your stakeholders favor.

A useful place to start (or restart) is with materiality, data management and reporting process assessments. This can be done internally by your ESG Team or externally by an ESG consultant. A materiality assessment can be used to determine your company’s most material ESG and sustainability impacts, risks and growth areas. Materiality goes beyond quantitative metrics and should include a qualitative assessment using facts and circumstances relevant to your company’s operations. A data management assessment can be used to identify and measure the quality of governance and data collection processes, compliance and internal controls. A reporting process assessment can be used to evaluate your company’s specific disclosures in response to the framework or standard selected.

Together these assessments should highlight areas of improvement for your company’s ESG and sustainability initiatives, data management and analytics, and quality of reporting. The assessments can also be used to benchmark your company’s ESG and sustainability practices against peers in your company’s industry.

Conclusion

The practice of ESG and sustainability is in its infancy. Laws and regulations are being created daily. Mastery of this area will require that you remain current on your company’s business and industry, as well as ESG and sustainability trends and developments. Without a global uniform ESG disclosure standard, a successful program will also require engagement with disclosure standards organizations, raters and rankers, proxy advisors, and institutional investors and other shareholders.

This engagement will be guided by your company’s existing ESG practices and how your company rates. Thereafter, strategies need to be designed, to address and disclose your company’s ESG weaknesses and developments. In-house counsel are well-positioned to provide leadership in these areas, particularly when helping to craft effective and well-supported public disclosure.

Authors: Alexander D. Gonzalez, Esq. and Richard Reich, Esq.

Additional ACC Resources

ACC Resource Collection: Sustainability
“ Practical Tips for CLOs to Increase their Organization’s Social Governance: Using the United Nations’ Sustainable Development Goal 16 ” (Key takeaways from ACC CLO roundtable, August 2020)
“ Environmental, Social, and Governance (“ESG”) issues pose risks to companies. Can Chief Legal Officers help drive solutions? ” by Veena Ramani. Senior Program Director, Capital Market Systems, Ceres (November 6, 2019)
“ The Climate is Changing: What Every Board Member Needs to Know ” by Brian M. Wong, Managing Counsel for corporate, finance and governance, Pacific Gas and Electric Company and Suz Mac Cormac, Partner, Morrison & Foerster LLP (ACC Docket, November 2019)
ACC Corporate and Securities Law Network (for ACC members only)
Legal news in ACC Newsstand powered by Lexology

GCs: Big Law ESG Practices Must 'Walk the Walk'

Mon, 24 May 2021 16:23:32 GMT

By Dylan Jackson and Dan Clark

This article was originally published here

The increasing prioritization of environmental, social and corporate governance issues for corporations—and similarly, the rise of Big Law practice groups to meet the demand—is requiring a somewhat novel intimacy between in-house teams and their outside counsel.

ESG groups are becoming increasingly ubiquitous among Big Law firms. Gibson, Dunn & Crutcher; Hunton Andrews Kurth; Seyfarth Shaw and Schiff Hardin have launched ESG groups in recent months pulling together multidisciplinary teams from offices all over the world.

But simply having the talent may not be enough. In a continuing tradition of corporate counsel empowerment that has been most forceful so far in the diversity space, outside counsel advising companies in advancing their ESG goals are being asked to, in a way, partner in the endeavor.

Connor Kuratek, deputy general counsel at Marsh McLennan in New York, said law firms that hope to work on the company’s ESG matters have to be on their own ESG journey whether that be through active diversity and inclusion efforts, environmental reporting or reducing their carbon footprint as much as possible.

“If law firms are going to advise and be successful in advising clients on how to engage in ESG matters, they also need to walk the walk,” Kuratek says. “They can also commit to reduce air travel for example. We want someone who shares the same values as we do.”

According to the 2021 Chief Legal Officer survey published by the Association of Corporate Counsel in January, a major theme among in-house counsel involved in ESG efforts included supply chain and third-party ethical requirements.

Much of the ACC’s ESG efforts have included upgrading its governance documents, and have been centered around diversity and inclusion.

Susannah McDonald, the ACC chief legal officer, said she has not engaged outside counsel to work on ESG matters. However, she is holding their feet to the fire on the issue of diversity and inclusion.

On the Big Law side, many firms are already feeling the pressure from their clients to hand over documents and submit reports on their own ESG efforts.

Kevin Poloncarz, co-chair of Covington & Burling’s environmental and energy practice, said clients are requesting scope reports from the firm—an accounting of an organization’s direct and indirect greenhouse gas emissions tied to things such as office space, business travel and commuting.

“We’ve received [ESG] requests from clients several months ago and have been participating with their procurement team,” Poloncarz says.

Poloncarz and others trace these client requests to the long-standing demand that outside counsel report diversity and inclusion figures, a dynamic that has only grown increasingly important as companies look to diversify to meet their ESG goals.

“Just like diversity and inclusion, our clients are going to ask for information from us and measure our success,” Poloncarz says.

Other firms are not yet fielding those same requests, but anticipate them coming in the near future.

“I have talked to clients about that issue and are starting to look at what their service providers can offer and promise in terms of carbon accounting,” says Amy Antoniolli, who heads up Schiff Hardin’s recently formed ESG practice. “It might be travel, it might be office buildings and where they operate. It could involve a whole sort of range of reporting obligations for those service providers. It’s not there yet but one day it might be.”

And as ESG practices continue to proliferate throughout Big Law, some in-house counsel are also left wanting in terms of substantive practice.

Carlos Brown, general counsel and chief compliance officer of Dominion Energy in Richmond, Virginia, said very few firms, in his experience, come to the table advising on social issues such as pay inequality, fair voting laws and diversity and inclusion.

“When you’re an attorney, you’re a counselor at law. You are there to give business and ethics advice. When it comes to those ‘S’ issues, our firms are not providing that advice. If you’re going to help our company you have to come to the table and say ‘let me flag for you what some of the best practices for similar companies are. Let’s talk about gender pay equity. They have to be providing that kind of advice if they want to be viewed as best in class in this space,” Brown explained.

Many ESG groups at firms have their focus in the SEC teams or environmental teams. Brown said he would like to see more labor and employment attorneys put in those groups.

“It seems like those lawyers have this perspective of ‘how do we position you so you don’t get sued but also so that you’re being viewed as a choice employer and a leader in civic activism and social justice?’” Brown explained.

ESG and Doing Well by Doing Good

Tue, 18 May 2021 14:51:46 GMT

Featuring:

Mark Henriques and Pamela Cone

This article was originally published here

Fueled by consumers and investors, we've entered a new era of corporate responsibility. An emphasis is being placed on integrating Environmental, Social, and Corporate Governance strategies and goals into operations like never before. In this episode, we talked to Pam Cone who is a veteran corporate advisor on sustainability and social impact.

ESG Board Committees, Part II: Five Steps to Achieve an Effective ESG Board Committee

Fri, 14 May 2021 14:55:42 GMT

Authored by:

Sarah Fortt

This article was originally published here

ESG is taking the world by storm. However, while ESG may seem like a relatively new concept, the reality is that non-financial risks and opportunities, and board governance over those matters, have existed for a long time, even before the term “ESG” was first coined back in 2005. However, what is new is that ESG creates a series of lenses through which companies can assess whether, and to what degree, they need to exhibit greater risk-creativity and strategic creativity. As I discussed in ESG Board Committees, Part I , when it comes to how boards oversee ESG issues, there is no one-size-fits-all approach. Once a company decides that it is time expand the scope of its board oversight to include various ESG matters that have not been explicitly included previously, there are five matters that the company should consider to focus the board’s attention on what matters most.

1. Treat ESG Committee Like Other Board Committees

First, if a company decides to go the route of creating a new board committee to oversee ESG, it is important that it be treated as a grown-up committee. ESG committees, or other board bodies overseeing ESG matters, should not be treated as a lesser version of board governance. This means companies should adopt a committee charter, and that charter ideally should be made public. There also should be an internal annual schedule for the committee’s meetings with template agendas based on the committee’s charter. The committee also should have the same rights and function in the same manner as the company’s other board committees, unless there is a specific reason for deviation.

2. Be Deliberate With ESG Board Composition

Second, companies should take the composition of their ESG board oversight body seriously as well. While not every company needs to have a climate change expert or human rights lawyer on their ESG committee, companies do need to consider each member’s qualifications. Companies also need to consider whether there are any sensitivities around appointing a particular director. Consider whether a director’s biography and qualifications are consistent with the company’s ESG goals and message. Directors who are on the committee also should receive ESG education to increase their level of ESG sophistication and preparedness. Companies should always have an eye on the degree to which they are supporting the board’s and management’s fiduciary duties, including, in this case, their duty of care.

3. Focus on Material Risks and Opportunities

Third, the board’s attention should be focused on material risks and opportunities, and the choice about what to share with the board should be guided by management’s materiality assessment of ESG based on the five lenses of materiality (as I discussed in ESG Board Committees, Part I ). One of the concerns I have expressed regarding companies creating ESG board committees is that they often do so prematurely, and thereby create the implication that ESG matters are material for the company before the company actually has identified whether, and to what extent, that is in fact that case. This could create litigation risk down the road. When considering how to report to the board on ESG matters, it is equally important to be clear on what are, and are not, material ESG matters for the company.

4. Consider ESG Committee’s Reporting Structure

Fourth, companies also should consider how the ESG committee, or other board body overseeing ESG matters, will report up to the full board, on what matters it will report to the full board, and how the committee will interact with the other board committees. For example, if there is separate ESG committee, will it engage with the compensation committee on issues around pay equity and human capital management? Will it engage with the nominating committee or the audit committee on risk oversight or ethical issues, and how will all the board bodies work together to not only create a culture of compliance and but also a culture of ESG excellence?

5. Be Thoughtful in Creating a Consistent Corporate Record

Lastly, as a governance guru, I have to discuss the importance of the corporate record. Consistent with the first recommendation that companies treat their ESG board committees as grown-up committees, companies also need to be thoughtful in creating a consistent corporate record. This means that minutes should reflect the committee’s oversight of the areas that it is charged with in its charter, and public disclosures that discuss board oversight of ESG should be backed up by the corporate record. Ultimately, the challenge of ESG does not lie in creating ESG disclosure, but in integrating ESG concepts into the operations and strategy of the corporation, and in creating consistency between what the company is doing, what the company is reporting, and what the company, and its members, care about.

Ready or Not, Here They Come: Climate Disclosure Requirements for All Public Companies Move a Step Closer to Becoming Law

Fri, 14 May 2021 14:38:02 GMT

Authored by:

Lucas F. Torres , Kenneth J. Markowitz , Christopher A. Treanor , John B. Lyman ,

Cynthia Perez Angell & Bryan C. Williamson

This article was originally published here

Democratic members of both houses of Congress reintroduced last month the Climate Risk Disclosure Act (“Act”), H.R. 2570 , a bill that would require every public company to issue climate-related financial disclosures. This week, the House Financial Services Committee reported the bill out of committee by a narrow margin on a party-line vote. Consistent with steps the United States Securities and Exchange Commission (SEC) has taken in recent months, the Act aims to accelerate the promulgation of rules requiring public companies to disclose the risks they face from climate change and the strategies taken to address them. The goal, according to the bill’s sponsors, is to help investors evaluate companies’ climate risk profiles and make investment decisions in line with the transition to a clean-energy, climate friendly future.

Currently, companies disclose climate risks in securities filings only if they deem such risks material according to the SEC’s 2010 guidance . Even if companies choose to issue climate disclosures, they face no federal obligation to report their greenhouse gas (GHG) emissions. The Act would change that by requiring companies to submit interactive, electronic reports disclosing their direct and indirect GHG emissions as well as the input parameters and assumptions (e.g., discount rates and time horizons) used to support those figures. These requirements include identification of the total amount of fossil-fuel-related assets owned and managed and the total cost of emissions, which companies must calculate pursuant to the federal government’s social cost of carbon figures (discussed in more detail here ). The Act’s emissions reporting requirements are similar, but not identical, to those proposed recently in California, raising possible preemption concerns if both pieces of legislation pass (or, at the very least, the potential for duplicative disclosure requirements). Like the proposed California rules, the Act would require the SEC to publish a report each year on its website that compiles companies’ disclosures.

Not only would the Act require disclosure of emissions, but it would also force companies to quantify the financial impact of climate risks on their bottom line, describe their overarching climate strategies and detail board-level oversight of climate risks and opportunities. Eschewing the current, principles-based disclosure regime, companies would need to account for different scenarios, including one where global temperatures rise to more than 1.5 degrees Celsius above pre-industrial levels and another in which they do not. Additionally, the Act would require companies to identify specific steps taken to address climate risks—including both physical risks and those resulting from the political, legal and economic transition to a climate-resilient society—and indicate how their strategies have evolved over time. Any qualitative disclosures would be required to rely on quantitative analyses; a requirement intended to address, at least partially, so-called “greenwashing” concerns .

The requirements outlined above would apply to all public companies, but the Act also provides more fulsome disclosure obligations for companies engaged “in the commercial development of fossil fuels,” including: (1) an estimate of total and disaggregated amounts of direct and indirect GHG emissions attributable to combustion, flaring, process emissions, directly vented emissions, fugitive emission/leaks and land use changes; (2) the sensitivity of reserve levels to future price scenarios (informed by the government’s social cost of carbon estimates ); (3) the percentage of companies’ reserves developed under different scenarios; (4) a forecast for development prospects under different scenarios; (5) potential GHG emissions embedded in proved and probable reserves; and (6) methodologies used for detecting and mitigating fugitive methane emissions. The final category requires a number of very specific disclosures of particular relevance to the oil and gas sector, such as data or information concerning the frequency of leak checks, processes and technology to detect leaks, the percentage of assets covered by disclosed methodologies, reduction goals for methane leaks, the amount of water withdrawn from freshwater sources to support operations and the percentage of water from regions of waste stress or wastewater management challenges.

To further the goal of providing complete climate-related information to investors, the Act directs the SEC to promulgate disclosure standards that foster comparisons both within and across industries, coupled with a mechanism to track how companies mitigate their exposure to climate risks over time. While the Act leaves it to the SEC to promulgate specific standards applicable to the finance, insurance, transportation, electric power and mining sectors, it defaults to disclosure pursuant to the Task Force on Climate-related Financial Disclosures (TCFD) in the event the Commission fails to issue standards within two years of the Act’s enactment. This default provision suggests that the SEC likely would look closely at the well-recognized TCFD standards in promulgating any standards.

The bill now moves to the House floor, where Speaker Pelosi will determine whether the bill will be wrapped into a broader climate package or proceed to a floor vote on its own. The Senate Banking Committee has not yet considered Sen. Elizabeth Warren’s (D-MA) Senate counterpart. Undoubtedly controversial, the bill may not survive both houses of Congress. However, its failure to become legislation will not doom mandatory climate disclosure requirements, as the SEC is in the process of reviewing its 2010 guidance and considering potential climate and Environmental, Social and Governance (ESG) disclosure rules. While the Commission might wait for Congress to act in order to increase the likelihood that its regulations survive judicial review, we expect it will be prepared to publish updated guidance or proposed rules promptly in absence of congressional action. SEC Chair Gary Gensler’s public statements all but confirm that the Commission is poised to move forward with new disclosure rules, as he recently characterized climate risk and human capital disclosure rules as one of his “top priorities” and “an early focus” of his tenure.

ESG Board Committees, Part I: Five Considerations Before Adopting an ESG Board Committee

Thu, 13 May 2021 14:54:13 GMT

Authored by:

Sarah Fortt

This article was originally published here

With the world of ESG expanding on a daily basis, I frequently receive questions on how companies should structure their board’s governance over the environmental and social matters included in their company’s definition of ESG. The short answer here is that, as is the case with traditional areas of corporate governance, there is no one-size-fits-all approach. For some companies the right answer will exist in better defining the scope of the responsibilities of their existing board bodies, for others, the right answer will exist in creating a new board body. Which approach is the right approach will depend on the board, its current composition, and the ESG strategy that the company is pursuing. Either way, there are a number of steps that every company should take before creating an ESG board committee (or assigning ESG duties to existing board bodies). Here I outline what those five steps are.

1. Identify ESG Team Players

First, companies need to identify the key ESG team players in their operations, risk management and legal and compliance functions, as well as their external ESG support. The role of the board is one of oversight, not management, and before a company sets up an oversight structure, it makes sense to identify who is actually going to be charged with the day-to-day, management-level responsibilities for actually “doing” ESG. With the mounting pressure companies are facing to report on ESG, it can be tempting to create ESG disclosure, any ESG disclosure, before a company actually takes the steps to identify their ESG goals and strategy. This is definitely putting the cart before the horse and is always a mistake. Companies that report before they plan are far more likely to find discrepancies between their reporting and their actual practices down the road.

2. Understand ESG Data

Second, before companies think about how the board will oversee ESG matters, they need to understand their data, and how their data is created and communicated through the organization. Before a company can report to its board on ESG, the members of management need to know what they know and how they know it. What risks are already being tracked by the enterprise risk management function, and are there non-financial risks that are already being reported to the board? What information does the company already have about environmental and/or social matters in its supply chain? What reasonable goals does the company have to become more sustainable or more diverse, and how does the company define “sustainable” and “diverse?” Doing an ESG data audit is not something investors are likely to ask about, but it is a critical step in creating the types of information that investors are likely to ask for without creating unnecessary risks for the corporation.

3. Identify ESG Materiality

Third, the internal ESG team needs to identify what is material for the company from an ESG perspective. One of the most frequent complaints I hear from directors is that they are inundated with too much immaterial information; board books have become too cumbersome, and dumping information on directors creates its own set of potential risks. Instead, I recommend using the five lenses of materiality to identify the company’s unique recipe for ESG success. As I have discussed in my other articles, the five lenses of materiality are: (1) what is “material” to the company’s specific stakeholders (i.e., investors, employees, customers, communities and business partners), (2) what is “material” to the company, including with respect to how it wants to be viewed in the marketplace and compared to its peers and competitors, (3) what external standards of materiality should apply to the specific area of disclosure (i.e., EU Sustainable Finance Disclosure Regulation, SASB, GRI, Joint Statement), (4) how does the U.S. federal securities law definition of “Materiality” apply to the company’s business, operations and financial statements, and what does that definition require in terms of disclosure, and (5) with respect to each of the foregoing, how does Point A compare to Point B, in other words, how is materiality moving and what will it mean tomorrow?

4. Consider Litigation and Political Strategies

Fourth, companies need to consider their litigation and political strategies. If a company’s litigation and political strategies say one thing, and its sustainability report says something else entirely, the company is not creating a consistent message, and a lack of consistency can, at a minimum, put the company’s social license to operate at risk, and, at worst, create litigation risks.

5. Understand the ESG Communities’ Expectations

Finally, each company needs to understand its ESG communities’ expectations. This obviously includes investors, but it also includes employees and the communities in which the company does business. In this regard, the perspective and buy-in of employees is particularly important. Do you know what your employees think about your ESG strategies? Are they onboard with supporting your ESG efforts? Ultimately, just like with ethical and compliance-related matters, the ability of a company to turn its ESG goals into reality comes down to whether or not it has a culture that supports those efforts.

Democrats’ ESG Drive Fuels Lobbying Bonanza in Washington

Mon, 03 May 2021 14:32:19 GMT

Authored by:

Andrew Ramonas

This article was originally published here

Environmental, social, and governance lobbying has more than doubled in the past year, as newly-in-charge Democrats push for companies to be more transparent and accountable on issues such as climate change, diversity efforts, and political activities.

More than 40 companies, trade associations and advocacy groups have lobbied federal officials on ESG matters so far in 2021, compared to only about 20 in the first quarter of 2020, according to a Bloomberg Law review of public reports. BlackRock Inc., PepsiCo Inc., and ConocoPhillips Co. were among the companies that disclosed ESG lobbying efforts for the first time as President Joe Biden took office.

Companies’ ESG lobbying is varied, ranging from the SEC’s interest in potential climate-change and political-activity disclosures for public companies to a Labor Department rule that would guide how pension and 401(k) managers handle ESG investments. Legislation that would mandate greater diversity on corporate boards has also attracted attention, filings show.

The lobbying push comes as companies are increasingly speaking out about social injustice and climate change, but have few rules dictating what they have to tell investors about their own performance. Trillions of dollars are at stake for companies as the Biden administration and Congress decide what information investors should have to evaluate ESG risks and investment opportunities.

“With it being a priority of the Biden administration, needless to say, it becomes a priority of business,” said Capitol Counsel partner De’Ana Dow, a lobbyist for the Energy Infrastructure Council, a trade group that represents more than 50 traditional and renewable energy infrastructure companies.

Rising Tide

Bloomberg Law examined quarterly lobbying reports submitted to Congress for mentions of ESG or environmental, social, and governance. The most recent filings covered the first three months of 2021, up until March 31.

ESG advocacy has been on the rise since lobbyists first started including references to it in their reports in 2015. But it really began to take off in 2019 and 2020 when the Democratic-controlled House started taking up legislation to require corporate disclosures on boardroom diversity, climate change, and other ESG topics. The ESG Disclosure Simplification Act and Improving Corporate Governance Through Diversity Act are among the bills that Democrats have reintroduced in this Congress.

The United Nations-backed Principles for Responsible Investment is among the organizations that entered ESG lobbying in 2020. Its advocacy has included ESG disclosure work on behalf of its more than 3,000 member firms, most of which are investment managers.

Investors need standardized ESG data they can use to make fully informed decisions about their money, PRI senior policy analyst Colleen Orr said.

“The market has moved drastically over the last few years on ESG investments, but the U.S. regulatory landscape has not kept pace with the growing understanding of the risks and opportunities presented by ESG considerations,” she said.

BlackRock and ESG

BlackRock’s first mention of ESG in a lobbying report came this year as CEO Larry Fink called on companies to confront climate change, racial injustice, and economic inequality.

The world’s largest asset manager referenced ESG in its lobbying filing in connection with the Labor Department’s investment duties rule.

The rule, finalized in the final months of the Trump administration, directs fiduciaries managing pension and 401(k) plans to put the interests of plan participants and beneficiaries in front of what it called “non-pecuniary” goals. The agency initially said it wanted to provide clarity on “recent trends” in ESG investing, but later removed explicit references to ESG from the final rule.

The Labor Department under Biden said it wouldn’t enforce the Trump-era rule and now is looking to allow socially conscious investing and define ESG factors as material to pension and 401(k) investors.

Incorporating ESG factors into investment decisions likely will lead to better risk-adjusted returns for investors over the long-term, BlackRock executives said in a letter to the DOL last year.

“We believe that sustainability-related factors can contribute to both value creation and value destruction,” they wrote.

A BlackRock representative declined to comment for this story.

PepsiCo, ConocoPhillips

PepsiCo and ConocoPhillips mentioned ESG in their lobbying reports when discussing their interest in disclosures.

ConocoPhillips is focusing on SEC work concerning climate-related financial disclosures, according to its filing .

The commission currently is seeking feedback from the public on potential disclosures on climate risk and greenhouse gas emissions. Congressional Democrats also have bills that would mandate climate reporting, including the Climate Risk Disclosure Act from Sen. Elizabeth Warren of Massachusetts and Rep. Sean Casten of Illinois .

PepsiCo is following potential proposals on the disclosure of companies’ political activities and ESG costs, its lobbying report shows.

The SEC can’t mandate disclosures on how companies use their money for political activities without congressional authorization. But Democrats in Congress are looking to give the agency the power to act.

ConocoPhillips and PepsiCo both have said ESG is important to their businesses.

PepsiCo was one of many companies that suspended political contributions following the Capitol riot earlier this year. And ConocoPhillips was recognized as the top U.S. performer in the “Oil & Gas Upstream & Integrated” sector in the S&P Global’s Sustainability Yearbook 2021, which includes companies with top ESG scores from the credit rating agency.

A PepsiCo spokeswoman declined to comment. A ConocoPhillips representative didn’t respond to requests for comment.

More lobbyists will follow in the footsteps of those at BlackRock, PepsiCo, and ConocoPhillips as ESG continues to garner attention in the U.S., Dow said.

“It’s gotten a foothold, and it’s growing substantially year over year in terms of the interest level and the market impacts,” she said. “I don’t think it goes away.”

To contact the reporter on this story: Andrew Ramonas in Washington at aramonas@bloomberglaw.com

To contact the editors responsible for this story: Michael Ferullo at mferullo@bloomberglaw.com ; Roger Yu at ryu@bloomberglaw.com

ESG Work Takes Off at Big Law Firms, as Clients Navigate Disclosure Requirements

Mon, 05 Apr 2021 16:38:05 GMT

Authored by:

Justin Henry

This article was originally published here

ESG "has been driven into the mainstream both by the regulatory and government side, but also the pandemic accelerated interest in this,” Stacy Louizos, co-lead of Blank Rome’s ESG team, said.

The first quarter of 2021 has inundated full-service law firms with demand from corporate clients for legal counsel on how to navigate the uncertain disclosure process and reputational management of their business’ environmental, social and governance (ESG) activity.

ESG practitioners at Blank Rome, Ballard Spahr and Armstrong Teasdale say the influx of ESG-related matters has been driven by the Biden administration’s stated efforts to broaden the disclosure requirements for companies.

ESG practice groups are proliferating broadly across the industry—Gibson, Dunn & Crutcher announced a new ESG group in March, for example, and Seyfarth Shaw formed an ESG group in February. Last month, Morgan, Lewis & Bockius bolstered its own ESG group by bringing on four lawyers from Patterson Belknap Webb & Tyler, who represent philanthropic and not-for-profit organizations and the for-profit organizations that work with them.

“ESG is starting to be considered part of a risk management program, that you need to consider these factors and how they impact your business,” said Stacy Louizos, co-lead of Blank Rome’s more than 25-lawyer ESG team and co-chair of the firm’s investment management group.

Armstrong Teasdale partner John Sten, who co-leads the firm’s securities regulation and litigation practice area, said disclosing activity related to the “S” and “G” in “ESG” isn’t as standardized as the “E” part, which has long held carbon-emitting companies accountable for their climate-related impact.

Under the Biden administration, Sten, a former member of the Securities and Exchange Commission’s enforcement division before moving to Armstrong Teasdale, said he anticipates “an abundance” of new guidance, regulation and enforcement around how companies should incorporate ESG in their public disclosure statements. By contrast, the Trump administration’s comparatively lax approach to regulation and enforcement made for an uncertain culture of how businesses would be held accountable, he said.

“At this stage, it’s really about advising clients about what ESG disclosures really mean, developing best practices for implementing it, and at the same time understanding that we’re going to communicate with regulators at times who are going to want to make sure they’re walking the walk,” he said. “That last part hasn’t landed yet, but you know it’s coming.”

Sten said Armstrong Teasdale is in the process of organizing an ESG group as part of an outgrowth of the firm’s own values of diversity, inclusion and sustainability.

Industry leaders say the change in administration isn’t the only thing driving client demand for ESG legal counsel; investors in all industries seek broader transparency from the companies they invest in on their impact on the environment, their equitable use of human capital and diversity in governance. In his annual letter to CEOs, BlackRock CEO Larry Fink told companies and BlackRock clients in January they should disclose business plans that will reduce carbon emissions to zero by 2050.

“If you’re an oil company, a lot of [ESG] is going to be at the forefront,” said Kahlil Williams, a litigation associate at Ballard Spahr who co-leads the firm’s recently launched ESG group. “Increasingly, people are saying it doesn’t matter if you’re a bank or whatever you do, you should be doing your part.”

At Ballard Spahr, firm leaders have organized a more than 50-attorney working group, led by practitioners spearheading each of the three components of ESG: partner April Hamlin, a corporate and securities law practitioner, leads the governance side of the group; Williams, who leads the group’s ”S” component related to diversity and pay equity; and of counsel Lorene Boudreau, assisting clients in environmental litigation.

“We are charged with understanding what’s happening in the ESG space,” Williams said. “It’s a lot of issue-spotting and it’s a lot of making sure everyone is on the same page in a space that’s growing rapidly.”

For many clients, Williams said, the lack of a standardized protocol for disclosure is a source of frustration for companies concerned about opening themselves up to liability and reputational cost. He said much of the activity around ESG disclosures arises from tensions between shareholder proposals for disclosure and a company’s leadership, and much of his work revolves around counseling clients on ensuring consistency between the business’ stated corporate values and their actual operations.

Williams said companies are beginning to be subject to litigation if their stated values of diversity included in their proxy materials don’t manifest in the company’s actual practices.

In response to a demand from shareholders, SEC Acting Director of the Division of Corporation Finance John Coates said in a March 11 public statement that the commission’s policy on ESG disclosures will need to “be both adaptive and innovative.”

“We can and should continue to adapt existing rules and standards to the realities of climate risk, for example, and the fact that investors increasingly are asking for ESG information to help them make informed investment and voting decisions,” Coates said. “We will also need to be open to and supportive of innovation—in both institutions and policies on the content, format and process for developing ESG disclosures.”

Team leaders at Blank Rome said the firm’s ESG team launched in early 2020 with five or six members, before the COVID-19 pandemic derailed efforts—attention turned toward advising clients on navigating the pandemic’s uncertain economic landscape. But the protests surrounding racial injustice that followed the death of George Floyd and others by police have kept shareholder activism alive. And environmental health continues to get attention.

ESG “has been driven into the mainstream both by the regulatory and government side, but also the pandemic accelerated interest in this,” Louizos said. “You need a multidisciplinary approach because it’s hitting in different ways in terms of the company, depending on where they are in the supply chain and what kind of work they do.”

Yelena Barychev, who co-leads Blank Rome’s ESG team with Louizos, said the group has recruited attorneys from securities and corporate law, investment management, labor and employment, and energy and environmental industry groups. Team leaders said the firm’s midmarket clients with sustainable lending funds or SPACs with ESG-driven strategies are retaining them for best practices advisory work.

“We’ve got people joining every day because it’s hitting so many areas of business that we’re finding there’s various areas of impact,” Louizos said.

Race Around the World to Achieve Net Zero Energy Consumption

Fri, 02 Apr 2021 16:57:08 GMT

Authored by:

Felipe Alice , Olivier Chambord , Kirstin E. Gibbs , Jennifer A. Josefson , Tsugumichi Watanabe and Hao Su

This article was originally published here

Since the 2015 Paris Agreement, countries around the globe have been analyzing their energy and development strategies and planning to meet their commitments. While some countries have made progress by, among other things, implementing new technology and examining different energy sources in an effort to achieve their commitments, other countries have been slower to implement any change. However, the events of 2020 appear to have breathed fresh air into the climate change dialogue.

In this piece, we provide highlights from the discussion of our colleagues from six of our offices across the globe during the first webinar in our Reaching Net Zero Together webinar series. We lay out the broad strokes that the European Union, Japan, China, Russia, the Middle East, Africa, Latin America, and the United States are making on their energy journeys.

European Union

Under the EU Green New Deal, Europe announced its goal of becoming the first climate neutral continent by 2050 through deep decarbonization of all sectors of the economy and greater reductions in greenhouse gas emission by 2030, while promoting job growth and green technology.

In July 2020, the European Commission (EC) adopted two key strategies to help support the goal of a fully decarbonized, more efficient, and interconnected energy system: the European Union’s Energy System Integration Strategy and the Hydrogen Strategy for a Climate Neutral Europe Strategy. Each strategy is set out as an EC Communication, which is meant to serve as an EU-wide roadmap. The Energy System Integration Strategy provides a holistic approach to the framework for green energy transition, with coordinated planning and operation of Europe's energy system as a whole across multiple energy carriers, infrastructures, and consumption sectors. Within this integrated system, the use of hydrogen could be one of the key ways to support the decarbonization of many industries through investment, regulation, and new research and innovation. Although nonbinding, the EC uses its Communications as instruments to identify key issues in policy areas and to set out the direction of future policies.

It’s hoped that these strategies will help provide a unified framework of the various regulations, directives, domestic initiatives, and legal and regulatory regimes that currently make up much of Europe’s renewable energy policies. There has been no single unified approach to date, with each sector siloed in approaches between member states. So it will remain to be seen how the execution of the European Union’s very ambitious goals will play out. In the near future, we can expect that energy policies and regulations will continue to very substantially evolve, and developers, funders, and investors in renewable energy, in particular, will need to keep pace with this shifting terrain.

Japan

Japan is currently dependent on imported fossil fuels, largely from the Middle East, with a single-digit energy self-sufficiency rate. So the goal for the country’s energy plan is as much to increase renewable energy sources as it is to increase energy production in the country in general.

Japan has long focused on hydrogen as a potential energy source. Composed of representatives from industry, academia, and government, Japan formed a Hydrogen and Fuel Cells Strategy Council in 2013 that helped create the country’s basic hydrogen strategy, which includes 10 elements largely looking at innovation, expansion, and education. As part of its Basic Hydrogen Strategy, Japan has supported international collaborations at both the governmental and private sector levels to promote hydrogen energy, hosting the first global hydrogen ministerial meeting in October 2018. The government is focused on developing an international hydrogen supply chain, which is still importing energy, but largely working with other countries outside the Middle East. Japan is also working on the domestic production of hydrogen, drawing on recent success at the Fukushima Hydrogen Energy Research Field, which is the largest hydrogen-producing facility in the world using renewable energy.

Many of the country’s major companies are invested in the growth of renewable energy, and specifically hydrogen, to meet their own customer environmental, social, and governance (ESG) goals. But they are finding that lack of detail in the government’s green growth initiatives and lack of access to renewable energy sources are making it difficult to meet those goals. Private sector ESG concerns and carbon-neutral goals of other developed countries will likely result in pressure on the Japanese government to hasten change. A lack of current concrete plans for a transition to a hydrogen society may make international investment opportunities in Japan a moving target, but there are opportunities for nimble investors.

China

China is the world’s largest energy producer and consumer. The country heavily relies on coal and imports of gas and oil. Since 2011, the country has burned more coal than all other countries combined. So its transition plan to renewable energy relies on comprehensive reforms extending from energy supply to energy consumption.

On the supply side, China has been vigorously promoting the clean and efficient utilization of fossil energy, and increasing the proportion of nonfossil energy. On the consumption side, Chinese authorities claim they are determined to prioritize energy preservation and tighten control of total energy consumption. China is aiming to achieve carbon neutrality before 2060 by upgrading energy technologies through innovation, maintaining energy security, and opening the energy sector further to the world.

To help its economy recover from COVID-19, China is approving a number of economic stimulus plans that are attracting the attention of international investors. But these plans to recover from economic losses borne from the pandemic may be off the green infrastructure track, e.g., the continued use of coal power plants. To help combat that, the Chinese government is lifting some restrictions on foreign investment into some sectors. On hydrogen front, China is encouraging foreign companies to invest in sectors along the full hydrogen value chain: from production, storage, transport, and liquification of hydrogen to manufacturing of hydrogen production equipment, to hydrogen batteries, to operation of hydrogen filling stations. While there has been a steady expansion of international oil companies and multinational companies, there is still heavy regulation and scrutiny over foreign investment into China.

Middle East and Russia

While Russia and many countries of the Middle East, as well as other oil-producing countries, have had a hot-and-cold relationship with the global climate change discussions, the events of 2020 may have provided additional stimuli for them to begin, in earnest, the active drive toward the road to net zero. In 2020 we all witnessed the historical drop in global oil demand as a result of the COVID-19 pandemic, on the back of what was already a weakened market.

And, of course, in addition to the drop in demand, there was the corresponding drop in revenue for the oil producers. This loss in revenue has been especially felt in the exporter countries, in particular the countries of the Middle East, which have a significant portion of their state budgets dependent on oil revenues for their fiscal break-even. The threat of a long-term low demand period, or even a plateau of demand, seems to have gotten their attention, with export countries recognizing that if not carefully managed, this low-demand trend could create destabilization in their overall economies. These countries appear to be identifying the need to replace or supplement the reduced oil revenues, as well as the geopolitical currency that oil has historically given countries such as Saudi Arabia and Russia.

In the last 12 months there has been a heightened movement across this region with the further development of programs and the more focused implementation of various “national visions,” “strategies,” and “roadmaps.” We are seeing a noticeable shift in the players involved in such plans, with greater involvement and even leadership coming from senior members of government, influential ministries, and leading companies (both national and private sector), which are moving from the position that these plans are only relevant to environmental authorities and organizations.

The various visions, strategies, and roadmaps being developed indicate that there are multiple and varying paths to a common goal. In this region a few of the focus areas include the following:

Energy efficiency: Traditional energy surplus has allowed many of these countries to disregard the low hanging fruit of efficiency and consider developing ways to reduce emissions to remain competitive and seek the best possible returns.
Gas and gasification: Gas will play a large role, capitalizing on rising demand as the world transitions from oil and coal to cleaner energy, as well as a focus on liquified natural gas (LNG) expansion with green or carbon-neutral LNG opportunities being explored to increase the value of the cargo.
Carbon capture use and storage (CCUS): CCUS technology is being explored across the region to reduce the carbon footprint of the product, as well as its use as a tool for enhanced oil recovery for the region's mature formations.
Offsets and carbon credits: Again, the implementation and use of offsets and credits are currently focused heavily on making the product carbon neutral to increase value and demand.
Renewables: The role of renewables in these regions will greatly depend on location. Russia already has a large geothermal and hydro component to its power supply, but it has not had substantial investment in other renewable sector projects. However, we are seeing continued interest in wind projects and a smattering of solar projects, with smaller localized, off-grid, or within the fence projects traditionally having more success in the short term. The Middle East is better placed for success in renewables with its location and solar potential; the region is putting more resources toward the large-scale development of renewable projects.
Hydrogen: Maybe the million-dollar question for this region is whether the commercialization of mass production and transportation of hydrogen will create a demand for a cross-border market growth, particularly with respect to the prospects of blue hydrogen in addition to green hydrogen (for the Middle East) and yellow hydrogen (for Russia).

Latin America

Across Latin America, countries are in very different stages of their renewable energy efforts and overall energy needs, creating divergent paths to achieving net zero energy consumption. Virtually all Latin American countries have signed the Paris Agreement, so there is an overall commitment to combating climate change.

In Brazil, the power matrix is already more than 80% renewable with a high reliance on hydropower, but recurring droughts have caused significant power outages, pushing forward considerable developments in wind and solar power plants. Brazil also had a very significant ethanol production in the 1980s, where many cars ran exclusively on ethanol. While that has lost some traction today, there are basically no cars in Brazil that run exclusively on gasoline given the high ethanol content (25% to 27%) in gasoline sold at Brazilian pumps. In addition, diesel sold in Brazil must have a minimum biodiesel content of 12%.

Chile is generally ahead of most other Latin American jurisdictions in the path to net zero goals, with significant developments in the adoption of renewables (hydroelectric, solar PV, wind, biomass, and geothermal) currently accounting for around 50% of its energy matrix. Separately, in 2019, the Chilean government released a decarbonization plan with a heavy reliance on solar power that set the goal of a complete phase-out of coal by 2040.

In Mexico, natural gas is already displacing oil and coal, with wind power gaining favor over hydropower. In an effort to boost energy production in Mexico, an energy reform initiative led by Mexico’s prior federal administration aimed to attract foreign investment in energy. Despite the success of the reform, changes in policy carried out by the current Mexican administration have adversely affected private investment. And in both Central America and the Caribbean, where many countries are heavily dependent on oil and diesel—in certain cases relying on those resources for more than 80% of their power—governments are fostering cleaner alternatives including LNG imports and the development of renewable resources, such as solar, wind, and geothermal.

Africa

Africa is composed of 54 countries so it’s hard to paint its energy picture with broad strokes. But there are well-established opportunities for renewable energy sources in the northern and southern tips of the continent. Both Morocco and South Africa have a proven track record of successful renewable energy development and a regulatory framework. For example, there is a Maghreb–Europe gas pipeline that links a field in Algeria through Morocco to Spain, and Morocco and Germany have signed an agreement to produce green hydrogen in Morocco.

Other regions are in earlier stages of energy development and face challenges unique to their locations. In Sub-Saharan Africa, geography is a large determinant in the success of energy programs. Countries that are further away from key demand centers lack the infrastructure to transport energy. There are also large areas of improvement for a regulatory framework and incentives that work to stimulate development. The Africa-Europe Green Energy Initiative seeks to take joint action to increase energy efficiency and the adoption of renewable energy sources. The initiative has set aside 30 billion euros for investment in Sub-Saharan Africa.

Since much of Africa has limited greenhouse gas emissions, there isn’t as compelling of an environmental argument for hydrocarbon substitution. And many countries are hydrocarbon producers, so there is some pressure to aim for co-existence rather than replacement in the short to medium term.

United States

New US President Joe Biden made good on his campaign promises to focus on climate change, taking significant steps on his first day in office to advance the energy and climate initiatives of his administration. Some of those key actions included the notice of the United States’ intention to rejoin the Paris Agreement, cancellation of the federal permit for the Keystone XL Pipeline Project, and directives by President Biden to certain federal agencies to take a whole-of-government approach to national policy on climate-related issues. These initial executive orders indicate that climate consideration is an essential element of US foreign policy and national security.

The administration has paused issuing new oil and natural gas leases on public lands or in offshore waters until a comprehensive review and reconsideration of federal oil and gas permitting and leasing practices can be completed. This review will include consideration of potential climate and other effects associated with oil and gas activities on public lands or in offshore waters and whether royalties associated with coal, oil, and gas resources extracted from public lands and offshore waters should be adjusted to account for corresponding climate costs. This action may not have an immediate impact on oil and gas companies as drilling on public land can and will continue with the moratorium on new leasing. However, it may have the longer-term effect of shifting oil and gas production overseas.

The administration also has demonstrated a commitment to innovation and scientific development by launching a climate innovation working group, with a new $100 million funding opportunity from the US Department of Energy to spur the creation of new energy technologies. This is expected to examine whether the much-hyped possibility of a hydrogen solution will be viable for the long-term success of US zero net carbon energy goals.

ESG Board Advisory Checklist

Tue, 16 Mar 2021 17:02:05 GMT

Authored by:

Jonathan M. Ocker , Mona E. Dajani , Sheila McCafferty Harvey

This article was originally published here

As institutional shareholders invest record amounts in environmental, social and governance (ESG)-conscious funds and companies, boards of directors are looking for ways their companies can design and implement a business strategy that produces a sustainable future and remain relevant in a world where climate change, social injustice, pandemics, disease prevention and wellness are the new normal.

Set forth below is an ESG checklist that boards can use to help formulate their ESG strategy:

Board Responsibility

Appropriate Committees

Determine which board members have this expertise and which committees have responsibility, e.g., the Compensation Committee for Human Capital Management (HCM) or the Nominating and Governance Committee for ESG/Sustainability. In addition, some companies are appointing ESG committees.

Charters

If necessary, amend corporation charters to add this responsibility and appoint appropriate members to such committees.

Diversity, a Business Imperative

Understand that diversity is a business imperative. Create programs to ensure that you have a workforce that is representative, at every level, of the diversity of your customers, your investors, communities and your partners. Add new diverse board members where expertise is needed or desired.

Tracking Costs & Success

Review specific things that are measurable and that relate to your business. Track costs of ESG activities and evaluate success of these activities across all business units.

Retain ESG Measuring Firm

Retain a third-party ESG measuring firm like Sustainalytics or MSCI so you have an outside barometer to measure your progress and to give your program credibility.

Assign Management Responsibility

Assign responsibility for your ESG program to one person: general counsel, head of investor relations, CFO or chief ESG officer.

Incentive Compensation Plans

Add ESG progress—e.g., diversity and inclusion, employee and customer satisfaction and community responsibility, as one of the individual performance factors, together with company performance, in the company’s annual short-term incentive plan for executive officers.

Green Bonds

Consider whether or not issuing a green bond is right for your company. These issuances have tripled in the last year as companies use these as a financing to finance important sustainability investments. Green bonds are another way to access ESG capital.

Access ESG Capital

Define an outreach program to access the major pools of capital ($25 billion) that are investing in ESG-friendly companies and are expected to grow to $40B in the coming few years.

Policies and Reports

ESG Topic Chart

Set up a chart to track and measure ESG topics over time with clear reporting so your constituents can see your progress. These ESG topics include efforts to measure a range of social, environmental and climate, employee well-being and engagement programs. These may include training, diversity inclusion, anti-harassment, sustainability, organizational development and employee wellness.

Post Policies and Reports

Responsible Committees should make sure their company has adopted and posted on their website all appropriate reports, e.g. human rights, corporate social responsibility (CSR) or sustainability, environmental, supplier code of conduct, diversity and inclusion, etc. In the 10-K, include an HCM report and make sure it is accurate and comprehensive.

Sustainable Development Goals (SDGs)

Ensure that the ESG program specifically addresses the United Nations’ 17 SDGs, as these are the parameters that many money managers and institutional investors are using to determine if you meet their ESG investment qualifications.

Proxy Disclosure

Director Bios and Skills Matrix

The director bios should show ESG expertise where appropriate and diversity statistics to satisfy applicable law, e.g. California and NASDAQ . A skills matrix should also be included. More and more companies are using graphics to drive the expertise and skills message home—“one picture is worth a thousand words.”

Board Nomination Graphics

Companies are also starting to include director nomination and succession graphics to show how they look for and appoint individuals with expertise and diversity.

CSR/Sustainability Report

A CSR/Sustainability Report should be included as well as HCM (which can be extracts from the website and the 10-K). These disclosures will help improve ISS and other institutional shareholder ESG rankings.

ESG Rankings

ESG rankings and remedial actions: boards should know their ISS and other ESG rankings (e.g. State Street’s R-Factor or Blackrock) to determine if improvement is necessary and what remedial actions need to be taken. This effort might include, among other things, adding or supplementing training and safety programs, benefits and wellness programs, diversity hiring and promotion programs, community outreach, evaluate energy efficiency, water usage, waste minimization, greenhouse gas emissions and climate risk and impact on natural resources.

Disclosure Requirements

The S.E.C. is demanding greater transparency on ESG issues, and its acting chair, Allison Herren Lee, noted that “no single issue has been more pressing for me than ensuring that the SEC is fully engaged in confronting the risks and opportunities that ESG [issues] pose to investors, financial system and our economy.” In fact, the S.E.C. is working on revisions to the 2010 climate disclosure standards and global consistency on ESG disclosure standards. The biggest complex question for public companies is going to be how to balance the tension between profits, principles and ESG metrics. Ms. Lee insinuated that it will be a iterative process.

Pillsbury’s ESG Capabilities

Pillsbury’s global, multidisciplinary team of ESG lawyers provides clients with the strategic counseling to boards, financial institutions, management teams and investors on a broad range of ESG issues and strategies, while also helping navigate the associated business, legal and regulatory challenges. Visit our dedicated ESG webpage to find out more about our ESG team and explore our ESG-focused thought leadership.

Beware the “ESGs of March” as ESG Regulatory Change Is Afoot

Tue, 16 Mar 2021 13:54:23 GMT

Authored by:

Thomas J. Krysa , Peter D. Fetzer , Stephen M. Meli , Stuart E. Fross , Margaret G. Nelson ,

Brooke D. Clarkson

This article was originally published here

Three recent developments in relation to ESG related disclosures are of note: (1) on March 10th, the US Department of Labor announced it would not enforce its own rules related to ESG investing, (2) on the same day the EU’s mandatory sustainability risk disclosure went into effect, and (3) the SEC announced an enforcement task force to hunt down ESG related misconduct on March 4th.

The DOL Signals A Possible Reversal

The DOL issued an enforcement policy statement to the effect that it would not enforce its own rules on ESG investing, because the ESG rules might not be well grounded in climate science. This may be the first step in negating the November 2020 adoption by the DOL of rule amendments that was not particularly ESG friendly. However, the text of the final rule is not a per se prohibition on ESG investing: rather the DOL currently allows use of non-pecuniary factors as a “tie-breaker” only when the plan fiduciary is not able to distinguish between investment alternatives on the basis of pecuniary factors alone and only if the fiduciary’s determination is well documented. The DOL’s November 2020 rulemaking is now simply not being enforced.

The SEC Signals ESG as an Enforcement Priority

The launch by the SEC of an enforcement task force to hunt down ESG misconduct immediately preceded the DOL’s ESG enforcement holiday (described above). The SEC mission , however, appears aimed at “green washing”.

EU ESAs Announce SFDR Implementation Time Line

Meanwhile in Europe, sustainability investment disclosure is now mandatory for all funds marketed in the EU, where the burden is to explain why ESG factors are not being implemented. The EU European Supervisory Authorities (ESAs) issued a joint statement on February 25, 2021 on the implementation timeline of the EU regulation on sustainability disclosure in the financial services sector or “SFDR” addressing the timeline from the disclosure implementation date of March 10, 2021 through the adoption of Regulatory Technical Standards, projected for year-end 2021, and the commencement of mandatory reporting on sustainability factors thereafter.

ESG Practice Groups Proliferate in Big Law, Driven by New Priorities

Thu, 11 Feb 2021 17:47:41 GMT

Authored by:

Dylan Jackson

This article was originally published here

Gibson, Dunn & Crutcher, Hunton Andrews Kurth and Seyfarth Shaw have all opened their own ESG practices in February.

Big Law firms are opening up environmental, social and governance practices, driven by priorities of the Biden administration and, increasingly, those of consumers and institutional investors.

This month, Gibson, Dunn & Crutcher announced its new ESG practice led by six partners in London, Los Angeles, Washington, D.C., and Dallas, Texas. On Tuesday, Seyfarth Shaw has formed its ESG group, comprised of 20 total attorneys and led by Chicago-based labor and employment attorney Ameena Majid, London-based international attorney Amy Levin, and San Francisco-based litigator Giovanna Ferrari. That same day, Hunton Andrews Kurth also announced its own group.

And on Wednesday, Orrick Herrington & Sutcliffe bolstered its existing group with the addition of Fenwick & West partner Ashley Walter, who will head the firm’s ESG practice.

ESG represents a range of nonfinancial factors that exhibit how a company acts toward its employees, vendors and consumers. ESG attorneys, for example, ensure that their clients abide by the U.S. Conflict Minerals Rule, a provision passed by Congress as part of the Dodd-Frank Act that requires public companies that use “conflict minerals” such as tin or gold to trace their supply chains and ensure that funds are not being directed to human rights abuses.

And what’s driving the recent growth among Big Law firms is twofold.

Similar to recent movement and growth among white-collar and state attorneys general practices , the Biden administration’s new priorities are driving up interest in ESG among corporations and, by extension, their outside counsel. The Biden administration and the U.S. Securities and Exchange Commission have all but promised to ramp up ESG disclosures, especially as it relates to climate change.

Earlier this month, the acting SEC Commissioner Allison Herren Lee hired Satyam Khanna to serve as a senior policy adviser for climate and ESG, where Khanna will “advise the agency on environmental, social, and governance matters and advance related new initiatives across its offices and divisions.”

Walter said he came to Orrick in part due to its strong energy practice, which he believes will come in handy with the Biden administration, especially if it begins to require public companies to make environmental disclosures, as some experts have predicted.

“Observers would say there will be a number of important topics in ESG,” Walter said. “But there’s questions about how important the ‘E’ will be.”

But ESG attorneys say that the increased attention into the area is also driven by consumers and institutional investors that are increasingly prioritizing the practice. Last week, BlackRock CEO Larry Fink told other companies and BlackRock clients that they must disclose business plans that will be compatible with a net-zero economy by 2050, a timeline set for in the Paris Climate Agreement.

Even before the pandemic, 52% of general counsel expected that they would need to ramp up their ESG efforts in 2020, according to the 2020 Chief Legal Officer’s Survey published by the Association of Corporate Counsel. And the definition of ESG is shifting to include not just the environment, but social justice as well.

“There is an expectation for CEOs to speak out on matters of social and environmental impact, whether that is Black Lives Matter, or AI or the equitable treatment of employees,” Claudia Toussaint, general counsel and chief sustainability officer of water supply technology company Xylem, told Corporate Counsel in January.

COVID, Climate Change and ESG – The Future of Disclosures, SEC Enforcement, and Securities Litigation

Thu, 11 Feb 2021 17:29:14 GMT

Authored by:

Rachel B. Goldman , Troy L. Harder , Tony L. Visage , and Thomas F. Kokalas

This article was originally published here

There can be no doubt 2021 is already shaping up to be a watershed year, including on the SEC enforcement and securities litigation fronts.

Pressure from all directions has been coalescing to drive change in the way companies report information regarding the impact of the pandemic, climate risk, and more generally, environmental, social and governance issues (ESG). It is critical that companies anticipate greater scrutiny regarding their reporting of risks associated with COVID, climate change and ESG, as well as be prepared for enforcement actions and securities litigation that inevitably will follow any perceived deficient disclosure.

The growing interest in more robust ESG disclosure has been accelerated by the unprecedented modern experience of the pandemic, the multiplying effects of climate change and calls for greater sustainability and social justice. The demands for more accurate and consistent disclosures of the material risks associated with ESG factors are coming from varied sources: regulators, shareholders, institutional investors and asset managers, NGOs, and financial institutions worldwide through global initiatives such as the World Economic Forum. ¹ While it seems unmistakable that some form of regulation and/or standardization of ESG reporting will take hold in the near future, it is also clear that the SEC—and securities litigators—have no intention to wait. The SEC has already begun enforcement efforts based on current regulations, and class actions regarding ESG disclosures have been on the rise.

SEC Enforcement
The SEC made a point of the importance it is placing on accurate disclosures concerning the pandemic when it announced settled charges against The Cheesecake Factory Incorporated in December 2020, and warned it “will continue to scrutinize COVID-related disclosures to ensure that investors receive accurate, timely information." ² Some have called for more guidance from the SEC on required disclosures related to the pandemic’s impact, and others have called for more robust enforcement. Regardless, there is consensus that more aggressive enforcement can be expected under the Biden Administration and the nominated-next Chair of the SEC, Gary Gensler. ³

Recent developments confirm that the SEC will be more focused on regulation and enforcement regarding climate risk and ESG. On February 1, 2021, the SEC announced the appointment of its first-ever senior policy advisor for ESG issues. As the Acting Chair of the SEC, Allison Herren Lee, explained, “having a dedicated advisor on these issues will allow us to look broadly at how they intersect with our regulatory framework across our offices and divisions.” ⁴

President Biden has made climate change and ESG issues a priority of his administration, and the decision to rejoin the Paris Agreement, which requires a transition to net-zero carbon emissions by 2050, reinforces that commitment.

Acting Chair Lee has made clear the SEC views climate change not only as an investment risk but also as a systemic risk to financial markets and it intends to make ESG a priority, with an emphasis on “uniform, consistent, and reliable disclosure.” ⁵ Further, Acting Chair Lee recognized that ESG risks are key factors in investment strategies: “[t]he bottom line is that businesses now actively compete for capital based on ESG performance, and that competition needs to be open, fair and transparent.” ⁶

Notably, Acting Chair Lee has made the additional point that not just issuers, but financial institutions should “produce standardized, comparable and reliable disclosure of their exposure to climate risk,” including indirect risk related to “the financing they provide.” ⁷ Funds and their investment advisers are also on the SEC’s radar for ESG disclosures. ⁸

Whether new regulations, industry standards or other ESG metrics are eventually imposed on reporting requirements, it is clear that the SEC will be closely scrutinizing all disclosures to ensure issuers accurately and reliably disclose all ESG-related material risks.

Securities Litigation
Although securities litigation filings showed a dip in 2020, likely due to the decline in M&A activity and pandemic-related court closures, the overall number of new cases was still near record highs with over 334 class actions filed, according to recent Cornerstone Research data. ⁹ Substantial class action activity is expected to continue in 2021 and beyond; it is easier than ever for would-be plaintiffs to connect with plaintiffs’ counsel through the internet and social media. In fact, immediately after the SEC announced the settlement with The Cheesecake Factory, certain law firms had posts on their websites offering to represent shareholders in class actions against the company.

With the focus of the SEC, institutions and the investing public on COVID, climate risk and ESG, companies can expect securities litigation based on these disclosures to increase. This litigation surge will likely be fueled by actions filed following increased SEC enforcement, but it will also be driven by independent shareholder actions. There has already been an increase in the last few years of event-driven litigation, where securities class actions are brought based on the occurrence of an event that negatively affects stock price and company value (e.g., #MeToo movement impacts, environmental events, and cybersecurity breaches). Failure to disclose, failure to adequately disclose, or making misleading disclosures of the events or the risks associated with the events, have been and will continue to be the basis for many of these securities actions.

Regardless of whether consensus can be reached on the standard for ESG disclosures or whether regulations are ultimately imposed, it should be anticipated that the sufficiency of disclosures of material risks related to ESG will be subject to analysis by courts in the context of class actions. ¹⁰

Conclusion
In order to be prepared for the coming wave of enforcement and litigation, companies and financial institutions should review—and strengthen where appropriate—their policies and procedures to ensure proper COVID, climate risk and ESG-related disclosures. Anticipating the rising expectations of shareholders and regulators is crucial for protecting corporate value in an era of significant social change and market interest. Additionally, issuers need to be prepared to respond to unexpected events, and to be able to do so in real time with sufficient disclosures and appropriate communications to help mitigate enforcement and litigation risk.

Bracewell has a multi-disciplinary team focused on ESG issues. We advise and support our clients drawing on our expertise in environmental strategies, securities matters, regulatory issues, government enforcement, commercial litigation, and crisis management, and we are at the forefront of the transition to sustainable energy. Please contact your Bracewell team member for more information.

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¹ http://www3.weforum.org/docs/WEF_IBC_Measuring_Stakeholder_Capitalism_Report_2020.pdf

² https://www.sec.gov/news/press-release/2020-306 ;
https://bracewell.com/insights/sec-sends-warning-shot-covid-impact-disclosure

³ As further evidence of the new administration’s pro-enforcement stance, the SEC announced on February 9, 2021 that it restored the ability of the enforcement division's senior officers to “approve the issuance of a Formal Order of Investigation,” which in turn authorizes staff to issue subpoenas and take testimony. https://www.sec.gov/news/public-statement/lee-statement-empowering-enforcement-better-protect-investors

⁴ https://www.sec.gov/news/press-release/2021-20

⁵ https://www.sec.gov/news/speech/lee-playing-long-game-110520

⁶ Id.

⁷ Id.

⁸ Id.

⁹ Annual Report on Securities Class Action Filings, Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse, released February 3, 2021.

¹⁰ All disclosures filed with the SEC are subject to Rule 10b-5, the general anti-fraud provision of the federal securities law, which makes it unlawful to issue materially misleading statements or omissions, or use manipulative and deceptive devices, in connection with the sale or purchase of any security. 17 CFR 240.10b-5.

The “ABC’s” of ESG

Mon, 08 Feb 2021 15:24:43 GMT

Authored by:

Erica T. Jones

This article was originally published here

In 2020, trillions of dollars flooded ESG funds, and many analysts are expecting this trend to continue in 2021. BlackRock, the largest asset manager in the world, plans to have $1.2 trillion in ESG assets in the next 10 years, and an estimated one-third of all U.S. assets under management are already sustainably invested . Given the importance of ESG to the securities markets, we herein present an elementary primer, explaining ESG issues and how they are affecting companies and their public disclosures—your ABC’s of ESG, so to speak.

So what is ESG, anyway?

The term “ESG” stands for Environmental, Social, and Governance. More simply, ESG captures an array of qualitative issues that may be considered by investors/investment professionals and incorporated into an investment analysis. There is no single comprehensive list of ESG issues, but you can conceptualize them as “hot” topics in the ever-evolving zeitgeist. For example, if opinion pieces in The New York Times address an issue, you can bet that it will be on investors’ minds, too. The CFA Institute compiled examples of today’s top ESG issues, as follows:

Although the “soft” issues that fall under this umbrella term are not part of traditional financial metrics and can be difficult to quantify in monetary terms, they have financial relevance as they can affect the risk and return of investments. ESG issues are thus increasingly being considered by investment professionals in their endeavor to identify and evaluate drivers of the risk and return of investments.

As ESG considerations factor more prominently into investment decisions, companies are constantly seeking to understand how they should (and, sometimes, must) account for ESG issues in their disclosures.

The Birth of ESG

The term “ESG” was introduced in 2004 in the UN Global Compact’s landmark report Who Cares Wins , which outlined recommendations by the financial industry to “better integrate environmental, social and governance issues in analysis, asset management and securities brokerage.” The report noted that, until then, “the industry [had] not developed a common understanding on ways to improve the integration of environmental, social and governance (ESG) aspects in asset management, securities brokerage services and the associated buy-side and sell-side research functions,” and asserted that more fulsome inclusion of ESG factors in investment decisions would “contribute to more stable and predictable markets.” A year later, the UN Environment Programme published the “Freshfields Report,” which showed that ESG issues are relevant for financial valuation . These reports created the foundation for the ever-changing but increasingly crucial ESG we know today.

Initially, ESG considerations manifested as “ exclusionary screening of listed equities on the basis of moral values .” The practice, however, evolved as investors came to understand that ESG issues have palpable financial implications . Indeed, investment professionals now utilize a range of methods to consider ESG issues, including :

best-in-class selection (i.e., favoring companies with better or improving ESG performance relative to sector peers),
active ownership (i.e., “entering into a dialogue with companies on ESG issues and exercising both ownership rights and voice to effect change”),
thematic investing (i.e., investing that is based on trends, a number of which include ESG issues),
impact investing (i.e., “investing with the disclosed intention to generate and measure social and environmental benefits alongside a financial return”), and
ESG integration, which is quite simply the “systematic and explicit inclusion of ESG risks and opportunities in investment analysis.”

Legal Risks and Increasing Regulation of ESG Disclosures

There are currently no federal requirements compelling issuers to make ESG disclosures in their public filings, unless they are otherwise material. However, given the current climate of increasing social accountability and reputational risk, along with the stated priorities of the incoming Biden administration, this may change.

Of course, ESG disclosures are already actionable if they are found to be materially false or misleading. Thus far, litigation centering on ESG disclosures generally has arisen in two contexts: (1) securities fraud claims under federal law, and (2) consumer protection or consumer fraud claims under federal or state law. The below cases highlight key trends in securities litigation with ESG-related disclosures at the heart of the matter.

In re BP plc, Sec. Litig. : Where disclosures related to ESG issues are sufficiently concrete, quantifiable, or falsifiable, they may be material to a reasonable investor and thus actionable under state and federal securities laws.
In re YUM! Brands, Inc. Sec. Litig. : Where an ESG statement is deemed vague, subjective, or aspirational, it may not be false, misleading, or material to a reasonable investor, and therefore, it may not be actionable.
Ramirez v. Exxon Mobil Corp. : Where an ESG disclosure is included within a quarterly or annual securities report, CEOs and CFOs may be liable as “control” persons for any false or misleading statements.
In re Eletrobas Sec. Litig. : Where ESG statements are made in response to investors’ concerns, especially when those statements are made “ amidst contemporaneous questions regarding the company’s ethics or investigations of the company’s illicit activities ,” courts have denied motions to dismiss.

Herbert Smith Freehills commits to net-zero carbon emissions by 2030

Sun, 20 Dec 2020 14:20:49 GMT

This article was originally published here

Herbert Smith Freehills has today announced its intention to reduce its carbon emissions to net zero by 2030.

The commitment will see the firm reduce overall greenhouse gas (GHG) emissions, by first reducing the emissions that it produces and then balancing that lower figure with emissions removed from the earth’s atmosphere to reach a net sum of zero.

The firm will reduce its carbon emissions in a number of ways, including: using clean energy; working with those suppliers who are also committed to reducing emissions; and supporting initiatives that remove any carbon dioxide that the firm produces from the atmosphere.

“This is the right thing to do – and I’m proud that we’ll be among the leaders in the legal sector meeting this challenge,” said Herbert Smith Freehills CEO Justin D’Agostino . “We’ve made excellent progress in sustainability over the last five years, but we need to go further – and we need to do it now.

“Our commitment to net-zero carbon by 2030 dramatically ramps up our own environmental efforts, while we continue to support our clients' efforts to reduce their end-to-end carbon footprint too.”

The new goal is backed by science-based targets aligned with the requirements of the Paris Agreement, which seeks to limit global warming to 2° Celsius above pre-industrial levels, but the firm will pursue changes to limit warming to 1.5°.

Herbert Smith Freehills is seeking independent verification for its commitment from the Science Based Targets Initiative (SBTi), an organization formed by the United Nations, World Wide Fund for Nature, CDP and others to encourage and measure corporate climate action.

The firm will publish annual updates on its progress towards achieving net-zero carbon in the firm’s Responsible Business Report.

The move is part of longstanding efforts to operate as a more sustainable business. In May 2017, the firm committed to reducing its carbon emissions by 15%, energy consumption by 10% and paper consumption by 30% by the end of 2020. By the end of 2019, the firm had beaten all three of its goals - a year earlier than planned.

To find out more on how we help clients navigate the impact of climate change, click here .

Notes

Two terms, in particular – ‘carbon neutral’ and ‘net-zero carbon’ – are often used interchangeably but represent very different approaches to combatting climate change.

Carbon neutral

Carbon neutrality means balancing greenhouse gas (GHG) emissions by ‘offsetting’ – or removing from the atmosphere – an equivalent amount of carbon for the amount produced.

This can be achieved by buying ‘carbon credits’ – in essence, permission to emit carbon dioxide or other greenhouse gases in exchange for offsetting the effects of those emissions – and/or by supporting greenhouse gas-reduction initiatives such as renewable-energy projects.

However, a commitment to carbon neutrality does not require (or even necessarily imply) a commitment to reduce overall GHG emissions. A carbon-neutral business needs only to offset the GHG emissions it produces – even if those emissions are increasing.

Net-zero carbon

In contrast, a commitment to net-zero carbon means reducing greenhouse gas emissions with the goal of balancing the emissions produced and emissions removed from the earth’s atmosphere.

Take, as a simplified example, the case of air travel: if, in total, people within a given business take 10 flights per year, the organization could achieve carbon neutrality for those 10 flights simply by buying enough carbon credits or by supporting renewable-energy projects to offset the emissions (or a combination of the two).

To achieve net-zero carbon, the company would need to reduce the number of flights per year as much as possible (to five, for instance) and also invest in projects that remove from the atmosphere the carbon dioxide produced by emissions from the other five flights.

Extrapolate a similar pattern across all the ways a business might produce emissions – such as heating its buildings or buying from suppliers who produce emissions – and the company achieves net-zero by:

reducing its GHG emissions across all these activities as much as possible
supporting/funding the removal of carbon dioxide produced by any emissions the business does produce.

How general counsel and lawyers must help deliver sustainability and ESG outcomes

Thu, 03 Dec 2020 17:51:33 GMT

Authored by:

Natasha Luther-Jones , Jean-Pierre Douglas-Henry , Steven Gray , Ben Eavis

This article was originally published here

The global climate and biodiversity breakdown demands an entirely new way of doing business, transitioning the world from its dependence on fossil-based resources to a decarbonized economy that operates within planetary boundaries.

Alongside the environmental challenges, businesses are grappling with securing a new social license to operate and redefining corporate purpose. Increasingly, businesses will struggle to thrive in a world of inequality and unrest, because their social purpose is inextricably linked to the company’s longer-term sustainability and ultimately profitability.

These transitions will have profound effects on the roles of lawyers and professional services firms as we transform in line with the demands and expectations of our clients, stakeholders at all levels, wider society, and our planet.

The meteoric rise of ESG

Environment, social and governance indicators have grown dramatically across all sectors, but there has been a marked increase in the financial sector and investment community. The main driver behind the acceleration has been heightened social, governmental, and consumer attention on the broader impact of corporations.

This can be seen through the growth in the value of global assets by using ESG data to better inform investment decisions, which has almost doubled over four years and more than tripled over eight years, to reach USD40.5 trillion in 2020.

Regulation and standard-setting are also evolving rapidly, with many central banks, regulation authorities and stock exchanges setting ESG-related listing requirements and more stringent disclosure standards. One example is the EU’s Taxonomy Regulation, which has created a classification system of economic activities that substantially contribute to environmental objectives, do no significant harm and include minimum safeguards (that is, respecting human rights).

Standard setters are increasingly aligning. The Task Force on Climate-related Financial Disclosures (TCFD) has proved to be the glue that binds them and policymakers have started to get ahead of curve, as shown by the UK chancellor recently mandating TCFD disclosures. The pandemic looks to be accelerating ESG regulation, with governments looking to incentivize a green recovery and a way of building back better.

So, what has changed and how will lawyers play a vital role in delivering organizations’ sustainability and ESG objectives?

As companies increase their commitment to sustainability and responsible business, so too has the involvement of the legal team. General counsel and in-house legal teams (and their external advisors) have always played an important role in managing social, ethical and environmental issues for organizations. However, legal teams are no longer just reacting to ESG issues, but proactively becoming involved in integrating material ESG risks and opportunities in business organizations, their operational policies and go-to-market strategies. The following key themes are emerging.

Sustainability strategy and integration into decision-making

In-house legal teams are increasingly involved in setting the strategic direction of sustainability and ESG within organizations and ensuring sustainability is embedded into corporate governance and integrated into broader business operations.

A key component has been integrating ESG criteria into investment decision-making and ensuring adequate ESG due diligence strategies are in place for any transactions, including in upstream and downstream value chains.

As more companies set stretching time-bound sustainability commitments and targets, legal teams have been integral in reviewing these commitments before launch and ensuring they stand up to external scrutiny. In a number of cases, the sustainability agenda is driven by the top legal officer.

Horizon-scanning

Lawyers are able to horizon-scan and understand what ESG opportunities and risks will affect the company. Sustainability challenges are ultimately about risk and reward – challenges and opportunities. Yes, it’s risk derived from fundamental global challenges and shaped by stakeholder expectations, rather than regulations or core commercial considerations, but it’s risk nonetheless.

Lawyers are experts in identifying and dealing with risk, and spotting trends in the evolution of regulations (such as regulations around the green recovery, modern slavery, circularity and extended producer responsibility) that can have a material impact on the business, and pre-empt and prepare for any changes.

The general counsel is well placed to articulate ESG risks and ensure these are effectively managed by incorporating them into the corporate management, adequate protocols and policies.

Transparency and disclosure

Legal teams are central to ensuring companies report on their sustainability progress in a transparent manner and one that explains material issues, the pathways and actions to manage them. Lawyers will make sure that corporate reporting meets the relevant reporting standards, and that disclosure addresses the ESG factors that are important to all stakeholders.

There is also a strategic question here beyond minimum reporting requirements: just how transparent and open does a company want to be about their sustainability and their journey? Opacity risks being the enemy of integrity in the ESG space for companies making a public virtue of their sustainability goals, progress and achievements.

And lawyers have an important role to play in providing strategic advice on this question, including with respect to “greenwashing” risk.

Policies and procedures

General counsel and in-house legal teams can help shape the culture and corporate decision-making of companies through the development of robust ESG policies and procedures, and ensure they are operationalized and meet stakeholder expectations.

Lawyers are often key to championing the values and purpose of an organization, and encouraging employees to uphold good levels of responsible business and compliance. Alongside HR, they can also ensure employees are appropriately incentivized to deliver against the company’s sustainability objectives.

Grievance procedures

Effective grievance mechanisms are a cornerstone of any sustainable business. They’re essential to mitigate the legal, financial and reputational risks that can arise regarding ESG issues in their operations, relationships and value chain.

Effective grievance mechanisms are a key component of ongoing due diligence, risk management and stakeholder engagement. They can also help to provide early and flexible resolution of issues, preventing them from turning into large-scale disputes.

The legal team plays a pivotal role in ensuring stakeholders have an adequate and transparent route to raise concerns and that the appropriate remediation will take place.

Managing indirect impacts

Social and environmental impacts extend beyond a company’s own operations and into their value chain, at both supplier and customer level. Lawyers are best-placed to lead due diligence reviews of their value chain for human rights, environmental and governance risks, and provide guidance on the management of broader ESG risks and impacts.

In a time of crisis

Finally, lawyers will always play an important role when there are social, ethical or environmental challenges that have the potential to affect the organization’s financial position and reputation, particularly when this results in regulatory intervention or litigation, but also targeting by interest groups which require “softer” but equally important responses.

The sector lens

As a business, we’re committed to making businesses better by helping clients and communities transition to and thrive in a more sustainable future. As outlined above, we understand the role lawyers play in this space – but on a wider level we also understand the importance of the sector a company operates in when developing a sustainability strategy.

In the sustainability context, our clients are working through their decarbonization and sustainability transitions. They are reimagining net-zero value chains and ensuring new social licenses to operate.

The COVID-19 pandemic has highlighted that we must support and equip our clients, and ourselves, to do this. Without this step we won’t be able to adapt to the systemic shocks which are yet to come down the line. We’re training all our lawyers on the fundamental challenges posed by ESG issues so they can continue to be trusted advisors to our clients and apply a sustainability lens to their day-to-day client work.

Our sector-led approach to sustainability and ESG helps us better serve our clients by navigating them through the complexity of ESG issues and ensuring they’re focused on the material issues in their sector.

But the part we play in shaping long-term structural change cannot be a passive one. We need to walk the talk and make real progress on our own sustainability journey. We’ve recently signed up to science-based targets to develop a net-zero pathway, instigated a new materiality assessment and enhanced the risk assessment and management of our value chain, thereby actively partnering with our clients as they too transition towards greater sustainability.

Lawyers are playing a key role in the development of sustainability strategies, as demonstrated in the various examples above. But the discussion goes much further than that. In the not too distant future, we’ll no longer be talking about “sustainability strategies,” because sustainability issues will be embedded in everyday advice and support.

We’re not there yet, but that is the future and we’re excited about the opportunities and realistic about the challenges.

A climate crisis imperative: Legal firms step up to the challenge

Fri, 20 Nov 2020 18:09:39 GMT

Authored by:

Pamela Cone, ISSP-SA

This article was originally published here

The Guardian has updated its style guide to introduce terms that more accurately describe the environmental crises facing the world. Instead of “climate change,” the preferred terms are “climate emergency, crisis or breakdown,” and “global heating” is favoured over “global warming,” although the original terms are not banned.

The Guardian , May 2019

Covid-19 has ravaged the world, with rising death tolls, lingering health conditions, and economic devastation. Along with this crisis, climate change has not slowed, and it continues to threaten people’s health, jobs, and safety.

As the world continues to confront the pandemic, it must navigate a path to a green and sustainable economy that produces jobs and prosperity, reduces emissions, and builds resilience.

It would be a huge disservice to everything we have suffered and have yet to go through, and everything we are learning during this pandemic if we do NOT also use this opportunity to accelerate our efforts to address existing systemic problems and looming climate challenges—as we #BuildBackBetter .

Many legal and other professional service firms are rising to the challenge and making significant commitments.

As I write this piece, the 75th United Nations General Assembly and corresponding Climate Week activities are concluding. Because all sessions were virtual this year, it was much easier to attend—no Uber or taxi rides, long lines for tickets, or traffic jams. While I missed the hustle and bustle of New York City, normally amplified during the weeks of the UN General Assembly, the virtual sessions didn’t disappoint.

Discussions addressed many of the global challenges we are facing, including hunger, financial insecurity, and healthcare. These issues, frequently dubbed “wicked problems,” have been amplified by the COVID-19 pandemic. Additionally, a palpable, heavy “gray cloud” hung over nearly every session:

“The pandemic has NOT slowed down climate change, which presents ever-growing threats to people’s health, jobs, and safety. The stakes could not be higher: The science shows temperatures are in record-breaking territory, greenhouse gas levels are mounting, sea level is rising, and natural disasters are getting much worse.” ( https://www.un.org/en/climatechange )

The private sector commits to change Governments have a major role to play in addressing climate change, but the private sector must be a strong partner in taking action. Many law firms, financial organizations, and insurance entities are stepping up their actions to reduce emissions and increase investments in cleaner, greener technologies and energy.

Organizations large and small have used Climate Week, the largest international summit of the year, to make significant announcements about their intentions, carbon targets, and joining the Race to Zero .

This year, many companies declared their climate programs and carbon emission reduction goals leading up to or during Climate Week, including:

Walmart pledged to zero out its operational emissions by 2040.
Morgan Stanley, the banking giant, committed to have net zero “financed emissions” by 2050.
Google committed that its data centers will run around the clock on zero-carbon power.
PwC Global announced its worldwide, science-based commitment to reach net zero greenhouse gas emissions by 2030.
Boston Consulting Group set a target of 2030 to reach net zero climate impact.
McKinsey and Company will reduce its emissions by 2025 in line with science-based targets on the 1.5°C pathway.

And these companies are only the latest additions to the many who already had established and announced such carbon targets, very publicly, as integral to their social impact strategies.

There is definitely a trend, according to Race to Zero , a global campaign that rallies businesses, cities, regions, and investors to work for zero carbon recovery. It reports that companies with a combined revenue of more than $11.4 trillion, equivalent to more than half the U.S. GDP, are now pursuing net zero emissions.

Vendors and advisors join forces

What do these private sector firms’ commitments and pledges mean to their vendors and suppliers—including law firms? The growing need for all firms to reduce carbon is a business opportunity (some would say obligation) for the lawyers who serve them. And that means ALL their lawyers, not just those specializing in environmental law.

During Climate Week, I attended a webinar sponsored by The Chancery Lane Project , a code name for the focused, collaborative effort of lawyers to develop new contracts and model laws to help fight climate change. As part of this global movement, legal professionals are empowering business communities to transition to net zero emissions.

During the webinar Rewiring Law to Fight Climate Change , speakers noted that 95% of lawyers active with The Chancery Lane Project don’t describe themselves as environmental lawyers. Fighting climate change requires the skills and talents of the entire legal profession.

Matthew Gingell, Chair of The Chancery Law Project and general counsel at Oxygen House, described the tactic of using an opt-out option rather than an opt-in option as a starting point for climate clauses. He went on to say,

“Governments have and will legislate for carbon emissions, but the impact of these laws will take time to come into effect. This is time we don’t have if we want to meet the 2030 goal of the 1.5-degree target. Climate contracts and model laws allow impact on climate change to happen sooner, in a way that aligns business objectives and economic prosperity.”

The Chancery Lane Project recently published “Climate Contract Playbook #3” and the #Glossary #2”—both available for download on its website .

The introductory language to their just released Glossary, 2nd edition, describes the opportunity/obligation:

“Our aim at The Chancery Lane Project is to help you to tackle climate change by rewiring contracts and laws. Our amazing participants have drafted 50 clauses and seven model laws that are freely available for you to use to ensure that your legal documents take account of their climate impact. We anticipate that contracts that include these clauses will bridge the climate action gap in getting to Net Zero emissions whilst legislation catches up. Whether you work for a law firm, a public body or in house, you can change the climate impact of your work by using the power of your pen. The problem of climate change is too urgent to allow doing something about it to remain the preserve of a minority of environmental lawyers. It is a pervasive issue that needs to be reflected in agreements covering all practice areas and sectors, including supply chain agreements, finance documents, corporate documents, real estate transactions, and construction contracts. By discussing these clauses with your clients and colleagues, adding them to your precedents, and incorporating them in your agreements, you will change the world.”

How the U.S. legal profession is taking action

Similarly, legal groups in the United States are also addressing the climate crisis. The Environmental Law Institute sponsored the publication of Legal Pathways to Deep Decarbonization in the United States .

This playbook provides well over 1,000 legal options for the United States to address the climate emergency facing this country and the rest of humanity. The book provides technical and policy pathways for reducing U.S. greenhouse gas emissions by at least 80% from 1990 levels, by 2050. This 80x50 target is indeed deep decarbonization, as it requires systemic changes to the energy economy.

The legal options involve federal, state, and local law, as well as private governance—even if they don’t seem politically realistic or likely. These legal tools can be used with significant economic, social, environmental, and national security benefits.

The legal community can create climate transformation

While I frequently sound like a broken record—I still strongly believe so many of societal challenges are opportunities for the legal profession to use its highest and best skills and talents to help solve — for their clients, for society, and for our planet.

The need for change has never been so obvious or necessary. Some would even say it is an obligation.

This is our moment. And professional service firms can and should be fulfilling a key role in pandemic efforts to #BuildBackBetter in a manner that also addresses the next existential crisis—climate.

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